AboutPeter M. Elliott Expertise First response to queries regarding extensions of time, variations orders, site instructions and payment using FIDIC and other forms of Conditions of Contract, based on English Law, and derivatives only.
Experience Value . . .
It's unwise to pay too much, but it's unwise to pay too little. When you pay too much you lose a little money, that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing you bought it to do.
The common law of business balance prohibits paying a little and getting a lot. It can't be done. If you deal with the lowest bidder, it's well to add something for the risk you run.
And if you do that, you will have enough to pay for something better.
. . . John Ruskin (1819 - 1900)
"We are too poor to buy something cheap"
.Romanian Proverb 2002
A lean compromise is better than a fat lawsuit.
George Herbert (English poet 1593-1633)
I said it in Hebrew, I said it in Dutch,
I said it in German and Greek:
But I wholly forgot (and it vexes me much)
That English is what you speak!" Hunting of the Snark - Lewis Caroll
Match your presentation to the reader!
The joy of food lasts but an hour, of sleep but a day, of a woman, but a month, but the joy of a building lasts a lifetime. Syrian proverb.
Comments and observations leading to improvements in the translation of FIDIC Red & Yellow books into Romanian prior to approval by FIDIC (reference 'Preface to the Romanian edition')
Question I appreciate your response. I will try to shed mroe light on the matter with some answers to your key factors. First, I was presented with an estimate, which I used to get other qoutes on and this was the best estimate. The builder subsequently supplied a guarentee of payment contract that I signed. There is no mention of termination action in the estimate. The builder was not terminated in a formal written manner, rather he phoned to say "he was sick of my complaining about cost overages and was done" we never heard from him again until the law suit. He did that 1 week after signing for me another guarenteed maximum price / completion date contract witch of course he went way over on cost and never completed. The documentation is all his and is very informal, there are no documents that are prepared by actual lawyers, rather just his estimate and GMP deal both prepared by him. There is no language regarding termination or anything in them. Very informal, I understand now I should have had an attorney look over this deal. Please advise with what you can, I'm thinking this would be more of a fraud / misrepresentation deal than anything else.
Bill
-------------------------
Followup To
Question -
I am at odds with our building contractor on a commercial project. We received a renovation qoute of $350,000. After our contractor walked off the job and the rest of his subs were paid to 1) finish and 2) keep liens off the property the total costs have come to $535,000, with even more outstanding. He has been compensated $41,000 of the $60,000 as laid out in the contract. I informed him that no more money would be paid to anyone for this work. He then sued claiming that since I have paid the balance to the subs, that I am now the principle contractor and he has lost and compensation because of it. Who is generally liable for cost overages and what are some possible remedies in this case? Naturally I will counter sue for the full amount.
Answer -
Hi Bill,
You do not say where you are working nor what form of contract is applicable, so the following remarks, as always, will be general in nature. It sounds as if there is a little emotion entering this dispute. Keep your responses in writing and objective or you will lose whatever chance you have of a settlement.
There are several factors which affect any answer to your question:
1. Was the contract fixed price or remeasurable?
2. Did you or your representative order more work?
3. Was there a clause which allowed you to terminate the contract with the contractor?
4. Did you terminate the contract with the contractor for cause in a formal, written manner?
5. Did the contractor formally terminate the contract?
6. Was the contractor in breach of contract by leaving the work?
Renovation contracts are more likely to have cost overruns greenfield projects. There is higher risk due to the uncertainty of hidden problems, especially if there are no original drawings and the buildings are old. Standards have changed or been issued. For example door and window sizes may be different, so new units have to be made to size or the openings revised.
If a project is delayed or increased and then the contract is cancelled, the contractor may have the right to claim for overheads and loss of profit, depending on the particular form of contract. Some forms of contract prohibit cancellation of the contract, merely to allow another contractor to finish the project.
Of course you can counter sue for the 'full amount', but what is the 'full amount'? If you sue and win, will you get paid? In any case, your lawyer will get paid and then you will be even poorer. As always, I recommend mediation rather than legal action.
If you wish to return with a follow up question, then please give me more detailed and specific information.
Answer Hi Bill,
There is a saying about a fool and his money parting company quickly. I do not say that you a fool, but to enter into a contract of this size without legal advice….. You must very rich or very experienced in the market. Any one can make a mistake, but to make the same mistake twice appears a little ill advised. If you have a spare $500K, I could help you spend it much quicker and more enjoyably than for hassles on a construction contract. I might not get the renovation completed, but we would have fun. Please forgive my comments, which are not especially helpful in your current situation, but someone has to make them.
You could try fraud and misrepresentation, but I would prefer to proceed with an action for breach of contract. It is more objective and it is easier to establish the facts, than in a case under the law of tort. It is obvious to me that your contractor is stressed and under pressure and possibly buying work in the hope of recovering any losses through cost overruns. You have a contract to pay a fixed sum of money for the completion of certain works and the contractor failed to complete his contract. You could sue him for failure to complete his contract and for any extra costs suffered by you in completing the contract.
You must be careful to ensure that you did not change the original contract in any way, quality, quantity or timing, otherwise the Contractor could muddy the water over cost increases. I have not worked on many GMP contracts, but there is a good bit on the internet about the advantages and disadvantages of this particular form of contract.
The full detailed advice on how to solve your problems is beyond the scope of this service. I think that you will have to employ a lawyer to advise on the local law of contract. If you decide to get a lawyer, ask him for a fixed fee advice or a free half hour consultation, after you have sent copies of any documents, plus a statement of your case in writing. Then get him to give you a firm quotation on the maximum costs for the case. Make sure that the Contractor can pay if he loses. Remember, even if you win the case, you have to recover the money from the Contractor. Your lawyer will want paying in any case, so you may finish off poorer than before. Try to avoid lawyers. They are the only winners in a law suit.
Good luck with your renovation and hopefully you will have learnt something for future projects. Life is a learning experience, and experience is always expensive!
