Chapter 4 What to do when things go wrong

There are various remedies outside of the contract that might be available when the variation procedure has not been complied with. These include:

  • collateral contracts – is there a collateral contract for the performance of the variation?;
  • restitution or quantum meruit – a contractor deprived of contractual entitlements might be able to claim compensation because the principal has been unjustly enriched by performance of the variation;
  • the Competition and Consumer Act 2010 (Cth) (formerly, the Trade Practices Act 1974 (Cth)) – either party might claim to be entitled to remedies in reliance upon the conduct of the other party;
  • waiver / estoppel / promissory estoppel – either party might allege reliance, to its detriment, on conduct of the other party.

These remedies are discussed in detail in Chapter 20 – Claims outside the contract.

CASE STUDY

Guy and Anor v K J & W E Mcilveen t/as K J Mcilveen Builders [2016] NSWCATCD 77

Facts
  • The owners engaged a builder to construct a kit home.
  • During the project, the owners requested variations to the works but no quotes were received from the builder or approved by the owners.
  • The owners claim that they should not be required to pay for the variations to the works claimed by the builder.
Result
  • The builder could not rely on contractual remedies to recover its costs for the variations because the provisions of the contract were not followed and claimed costs were not provided until after completion (s10(3) of the Home Building Act 1989 (NSW)).
  • However, the court held that a quantum meruit claim was available to the builder to recover its costs in respect of the variations.
  • It should be noted that most domestic building legislation provides that variations must be in writing but the decision of this case would not universally be applied in all jurisdictions because of the way the specific legislation has been interpreted in those jurisdictions.
Updated May 2020