Can I get my deposit back from a builder?

Question

In April this year I contacted a local builder who had done work for me before. The agreed price was £10,000 and he asked for 50% deposit and 50% on completion with the work to commence within 6-10 weeks. That would have been 18 June at the latest and it was estimated that the work would last 3-4 weeks. In July I hadn't heard anything so I contacted him and he replied saying that COVID-related issues have delayed all their work plus his father had suffered a stroke which had also impacted his work.

He said that my project would now be a winter project. I replied saying that I was sorry to hear his news, but not to worry, and just keep me updated. That was on 25 July. He thanked me for understanding and I haven't heard from him since.

Then my brother died unexpectedly a few weeks ago, which has left me with a lot of expenses and I can now no longer afford to pay the other 50% of the building project. In fact I would like to cancel and receive my deposit back. It's quite possible that the builder will be understanding, but I would just like to explore the legal situation concerning this, in case he isn't.

There is no written contract. Everything was discussed over WhatsApp messaging. We did not discuss possible delays or cancellation - just the start date (6-10 weeks) cost (£10k with 50% up front, 50% on completion) and the likely duration (3-4 weeks).

Answer 1

Yes, but ...

Unless the builder agrees to end the contract by agreement, you will be required to pay damages which may be more or less than the deposit.

Contract terms

Not all terms of a contract are created equal. The law devices contract terms into conditions, warranties and intermediate terms. A condition is a term that is essential to the execution of the contract, that is, it is "of the essence". A warranty is a requirement that a party is obliged to perform but, if they don't the contract can still reach completion. An intermediate term could be a condition or a warranty depending on how egregiously it is breached and you don't know which until it goes to court.

Any term can be expressly made a condition (or a warranty) by the contract - a common formula being time is of the essence. This is its original meaning and still has its traditional meaning in law although the phrase has entered the vernacular as a synonym for "quickly" or "urgent". In many ways, legal terms are fossils of ancient language use.

So, for your example, the construction work by the builder and the payment by you are conditions: these are essential features of the contract. The quality of the workmanship is a warranty: if the paintwork is a little dodgy or the windows are not quite plumb, that does not stop you from enjoying (most of) what you contracted for. Time, both for the builder to build and for you to pay, are intermediate terms.

Breach of Contract

Now, if one party breaches any term of the contract, the other party is entitled to compensation in the form of damages. Damages for breach is the amount of money required to restore to the innocent party the benefit of the contract.

So, for example, if the paintwork were "dodgy", the appropriate damages are the cost of employing a professional painter to rectify the work. Both parties have an obligation to mitigate loss so, in the first instance, you would have to give your builder a reasonable opportunity to rectify any defects, including dodgy paint, at their expense and, only if they failed to do so could you seek the costs of doing so - whether you actually used the money to fix the paint or blew it all on a holiday in Majorca is irrelevant.

In addition, if the breached term were a condition, including an intermediate term that was egregiously breached, the innocent party has a choice to make in addition to seeking damages. They can either affirm the contract and keep it alive, or they can terminate it and bring it to an end.

So, did your builder breach the contract?

Probably not.

It is unlikely that vague indications of 6-10 weeks to start and 3-4 weeks to finish amount to a term of the contract although they do inform the implicit term that a contract will be completed within a reasonable time. As such, a reasonable time for this contract is 3-6 months. If the work had been completed anywhere near this time the builder would not have been in breach.

However, it's irrelevant.

Your agreement is a valid waiver - in return for the builder's promise to do the job in "winter", you forgave any claim for breach of contract for the delay.

Repudiation

Unless the builder agrees to end the contract on whatever terms you can negotiate regarding further payments or refunds, your decision not to proceed is a repudiation of the contract - ending it without lawful cause - and therefore a breach of a condition. The builder is entitled to damages and can either affirm the contract (i.e. insist that you proceed) or accept your repudiation and terminate the contract for cause.

Practically, affirmation is not possible in this situation as a court will only force you to comply where damages are not adequate compensation. Examples of this would include a contract for the sale of something unique, like art, a vintage car or real property - no amount of compensation will allow the buyer to obtain the benefit of that unique item so a court may force the sale. All the builder has lost is money and money can adequately compensate for money.

The damages the builder is entitled to are those which would put them in the same position they would have been in if the contract had been completed. That is: £20,000 less whatever it would have cost the builder to complete the contract. This may be more or less than the £10,000 deposit.

Answer 2

There are a number of points to consider here. Please be aware that on this site questions are not allowed to ask for specific legal advice, so my answer should be seen as stating my opinion on the general principles and not advice on what you can or should do.

Firstly, you do have a contract (and it is evidenced in writing in your WhatsApp chat log). That's because both sides provided consideration (something of value), an offer was made and accepted, and you both intended it to be binding; the latter being a rebuttable presumption in a business context. The terms of that contract will consist of whatever you agreed at the moment an offer was accepted. Certain clauses will also be implied into the contract by operation of law even if neither of you discussed it. For example, Section 49 of the Consumer Rights Act 2015 implies a term into every contract to supply a service to a consumer that the trader must perform the service with reasonable care and skill.

There is a common law right to terminate a contract in the case of repudiation. However this can be difficult to establish; the breach has to be a fairly serious one, such as renunciation (extracted from Practical Law which is pay-walled):

Renunciation of a contract occurs when one party, by words or conduct, shows an intention not to perform, or expressly declares that it will not perform its obligations under the contract in some essential respect.

While a delay of a few days or weeks might not amount to renunciation, delay from summer to winter could if the timing was an important part of the contract.

However, given that you have already agreed to postpone the works, the builder might be able to rely on estoppel. Practical Law has this to say about estoppel in relation to termination:

An estoppel may arise when one party has led the other to believe that it will not enforce its strict contractual rights, so as to make it unfair to go back on that position now. This could work for or against a terminating party, as follows:

• The terminating party might not be allowed to revive grounds for termination that it had previously allowed to pass.
• The other party might not be allowed to challenge a notice it had appeared to accept as valid.

Regardless of whether or not you terminate, the builder has breached the contract by failing to start and complete the works by the agreed dates. The standard remedy in court for a breach of contract is damages. Other remedies are available such as specific performance (an injuction to compel the builder to do the works) but the court will usually award damages unless it wouldn't suffice.

If you do not terminate, or if the works are completed (but late) then damages will be limited to whatever loss you have suffered due to the delay. Unless there are relevant circumstances which suggest otherwise then your loss is likely to be low in such a case. If you terminate then damages would likely be the full amount of the deposit.

As with termination, the builder might be able to rely on estoppel due to the fact that you agreed to a postponement. To establish estoppel the defendant will normally need to show the following (also extracted from Practical Law):

• A representation was made by a party to litigation (B), or some person for whose representations that party is responsible.
• That representation contradicts a representation or case which B subsequently seeks to advance in litigation.
• The original representation was made with the intention of inducing the representee (A) to rely upon it.
• A changed its position in reliance upon the representation and would suffer detriment if B were permitted to resile from the representation in the proceedings.

Answer 3

The whole point of a contract is to compel the parties to keep their promises and hold them legally responsible if they do not.

You have committed to the contract, and now there is no way to cancel it unilaterally (the fact that there is no paper setting out the terms does not change anything; you have a contract).

Your best bet would be to talk to the builder, explain the situation and ask to cancel the deal and return the deposit. If that doesn't work, it may be worth reminding him that you understood his difficulties when he had them and now it's his turn.