Hypothetical by Manny Wood published in the Coffs Coast News Of The Area on 18 February 2022.
Paul and Amy purchased a vacant block of land and are ready to build their new home. They settle on Slick Homes as their builder.
During the negotiations with Slick Homes, Amy was adamant that the house had to be ready for Christmas the following year.
This timeframe gave Slick Homes 15 months to build the house.
The parties agreed to and signed a standard building contract. The terms of the contract included a 200-day handover date, however additional time was allowed for a 3 week break over New Year, and other time extensions for “reasonable” delays.
Three months prior to the move-in date, the building works stalled. To get the project up and going, Slick Homes requested Paul and Amy make an advanced payment outside the scope of the contract, to cover its cash flow problems. It became clear their home would not be ready for Christmas as planned.
Paul and Amy had now spent an additional 6 months on rent and were incurring storage expenses. They sought legal advice.
Their solicitor advised them that the standard contract included terms addressing building delays, however the delays were now beyond the contract exceptions, giving rise to compensation payable under the contract by Slick Homes to Paul and Amy.
However, the contract schedule that sets out the weekly amount for compensation payments was left blank, and under the terms of the contact if this amount is not specified then the compensation payable by the builder is NIL.
Paul and Amy now wish they had instructed their solicitor to review the contract before it was signed, as they have spent over $50,000 in expenses associated with the delay, which could have been the subject of specified compensation and the contract could have given them a “stick” to encourage a timely completion of the build.
Thank you to Anthony Fogarty for his assistance with this column. If YOU would like a particular issue addressed, please email me at manny@tblaw.net.au or call me on (02) 66 487 487.
