How Do I Terminate My Home Building Contract?

For homeowners, building your own home can become a stressful exercise which often results in litigation over which party was actually in breach of the contract. For homeowners, it is a regular occurrence to become frustrated by builders and contractors, but terminating the contract prematurely or without legal advice can limit a homeowner’s right to damages.

If you are a homeowner and you have found that your builder or contractor has:

• varied the contract on numerous occasions;
• went over budget;
• increased the costs for the construction of your home;
• is not on site regularly; or
• built your home with many defects,

then you may have a legal remedy against the builder or contractor.

If you are a builder or contractor and the homeowner:

• consistently interferes with your subcontracts;
• is performing their own construction works; or
• fails to make progress payments,

then you may have a legal remedy to terminate the contract and prevent the homeowner from issuing legal proceedings for the recovery of damages.

In the case of Shevill v Builders Licensing Board [1982] HCA 47,it was held that a party may repudiate a contract by renouncing its liabilities under the same by adducing evidence that:

• there is no longer an intention by the other party to be bound by the contract; or
• by showing that that party no longer intends to fulfil the contract by acting in a manner which is substantially inconsistent with the contract.

In this situation, the repudiation may be accepted and that party can then elect to discharge themselves from further performance of the contract and sue for damages or to enforce performance of the contract. However, the law of repudiation and election is a very complex area of law. It was stated in the case of Laurinda Pty Limited v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23, referring to Lord Wright’s admonition that “repudiation of a contract is a serious matter, not to be lightly found or inferred”. Simply put, if you seek to terminate a contract based on the repudiation of the other party, but that other party’s actions did not in fact amount to repudiation, then you may be liable for damages for wrongfully terminating the contract.

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This article is not legal advice and should not be relied upon as legal advice. All articles found on this website are intended to provide informative information, nevertheless, in many instances legislation and case law has been simplified and/or paraphrased. If you would like personal legal advice based on your current circumstances, you should contact MurdockCheng Legal Practice for a free consultation.