The recent case of a homeowner and contractor demonstrates, yet again, why contractors, even on small jobs, should make sure that they cover off basic contractual points in writing. The alternative: rough justice.
On April 30, 2002, Ms. Ford and Mr. Chan met and agreed verbally that Chan would build an English country garden on Ford’s property. It appears that that’s all they agreed on. Ford claimed that there was a fixed contract price of $25,000 inclusive of taxes, and a completion date of June 20th. Chan claimed that the fixed contract price was for $30,000 and that he had until August to complete the project. Chan was paid $13,000 on April 30th and a further $12,000 on May 17th. Ford also claimed that the price she was quoted by Chan included provision of an irrigation system to her satisfaction.
Ford fired Chan on June 14th as she was unhappy with the pace and quality of the work, and because of her overall lack of confidence in Chan’s ability to complete the work by June 20th. After firing Chan, Ford hired another landscaping company (Sims) to complete the work on her garden. Ford paid Sims nearly $18,000 under a written contract. That work took about six days. Ford also paid over $2,000 to another company (Aqua) for an irrigation system that had apparently been damaged by Chan’s excavator and needed repair. Ford also presented expert evidence that Chan had damaged the roots of a cedar tree on her property while excavating, and that the tree was dying as a consequence.
Ford sued Chan for negligence and breach of contract.
DECISION & COMMENTARY
The court dismissed the negligence claim summarily: there was no evidence about what standard Ford was holding Chan to (i.e. no standard of care), and there was no evidence that he breached any duty owed. Given the evidence reviewed by the court, this result was predictable.
Far from predictable, however, was the result arising from the contract claim. Not so much in the approach taken by the court, but particularly in terms of the final award. The court began its analysis by stating an elementary principle of contract law, namely:
In the absence of the requisite certainty and clarity, the courts will not declare that a contract exists.
Next, the court identified the primary issue: Did the parties enter into an enforceable contract?
The court determined that there was no contract because there was no certainty or clarity with respect to when the work was to be completed. The court did, however, find on the evidence that the contract price was $25,000 rather than $30,000.
But that was not the end of it. The court determined that Ford was entitled to restitution based on the reasonable value of the work left incomplete by Chan, or what is known in legalese as a claim in quantum meruit (literally, Latin for “as much as he deserved”). The Court decided that Chan would be “unjustly enriched” to the extent that he was paid in full without doing all of the work – whatever that work was supposed to be.
The court openly admitted that the assessment of work completed by Chan was going to be “necessarily arbitrary.” It was impossible to tell to what extent the work Chan was supposed to have done was actually done by Sims and Aqua. Put another way, there was no evidence that the expenditures claimed by Ford related to Chan’s obligations.
In the end, the court awarded $13,000 to Ford on a quantum meruit basis. Coincidentally, this was the same amount paid by Ford initially to Chan on April 30th. Apparently, in the court’s view, Chan only deserved slightly less than half of the monies he collected from Ford. The decision represents the rough and ready approach to assessment of damages where there is no contract between parties.
Always get at least the basics in writing, signed and dated by both parties: (a) What work is required? (b) Who is responsible for doing it? (c) How much is it going to cost? (d) When does it have to be completed? Whether owner or contractor, failure to do so leaves you open to rough justice.
This article was written by Robert G. Kuhn, a lawyer who practices in construction law at the law firm of Kuhn LLP. It is only intended as a guide and cannot cover every situation. It is important to get legal advice for specific situations. If you have questions or comments about this case or other construction law matters, please contact us at 604-864-8877.