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Alice H
Alice H, Solicitor/Partner
Category: Law
Satisfied Customers: 2847
Experience:  Partner in national law firm
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In May 2012 I received a quote for £137,235.00 from a builder

Customer Question

In May 2012 I received a quote for £137,235.00 from a builder to put an extension on my house. The quote was titled 'break down' and emailed to me. I did not say it was with or without VAT and not VAT number was displayed on it. I asked and was told it was inclusive of VAT. This was also discussed with my archtitect at the initial site meeting.

I made 8 payments (amounts approved by architect). Then on the 9th payment, 25th Sept 12, an invoice arrived carrying £3k VAt. I queried this with my site manager and was told it would be rectified and balanced up. There was no request for VAT on the next payment on 24th Nov 12. (The entire job should have been finished in Oct 12 but there was a high level of incompetency and poor or non-existent management.) On 10 Dec 12 my site manager turned up saying the owner of the company wanted more money (£40k) for works and he wanted to charge VAT. At no point had we (me or architect) been advised of this during the job, despite the fact I had asked the builder to liaise with my architect. There had been extras which were approved and paid which are not under query.

I refused to pay anymore than was quoted and the extras already agreed. The builders walked off the site without finishing the job in Feb 13.

In April I had a call from the builders secretary to say he wanted to meet. I agreed and we were supposed to meet May 9 13. The builder cancelled.

On October 14 2013 - 8 months after he walked off site, he has put a 'consultant' in touch with me by email. The tone is agressive and threatening insinuating that I will be in trouble with HMRC if I don't make a full and final settlement offer against £32k worth of VAT.

They also claim they spent over £200k on the job and that if I don't pay up then they will take me to court for a lot more money.

My architect has written to them to back up my case and pointing out that they constantly refused to liaise with him.

They are now threatening to take me to court for £32k VAT and apparently extra charges which they previously said they accepted as a loss if I paid the VAT.

I had 3 quotes for this job originally, around the same price.

I would like to know where i stand with the VAT issue and if they are in Breach of Contract for leaving the site before the end of the job?

Thank you.
Submitted: 3 years ago.
Category: Law
Expert:  Alice H replied 3 years ago.
My name is Alex Hughes and I'm happy to help with your question today.

Do you or your architect have evidence that the original sum was inclusive of VAT?
Customer: replied 3 years ago.

No written evidence, only verbals.


 


 


A portion of the build was for a disabled aunt which they told me they would deal with and asked me to sign a blank form, they later gave me another form, blank again, for my aunt's signature - I don't know how much they claimed as they said it was for them to sort out. She died in November and they told me I would now have to pay VAT on that part of the job (this is implied in their consultant's emails). I phoned HMRC however and they told me that the VAT free status would be honoured. I have reported this to the builder who has not replied on the issue.


 


Thank you Alex.


 

Customer: replied 3 years ago.

Alex,


 


The builder asked for quite a few of the payments to be made in cash but I have kept signed receipts for every payment.


 


Stephanie

Expert:  Alice H replied 3 years ago.
Thanks. Please bear with me while I type an answer.
Expert:  Alice H replied 3 years ago.
Please could you clarify: in addition to the quotation was there any written contract formalising the agreement?
Customer: replied 3 years ago.

 


The answer is no.


 


The architect suggested they sign one and provided one (email) but they did not sign it and give it back. I should have chased it but they seemed to together with everything it didn't seem necessary and I let it go. The architect sent a number of emails however on various points, I asked them to liaise with him but they resisted and would only talk to him when he was on site.


 


I can see now this was a deliberate ploy. I am told they have liquidated many times previously.

Customer: replied 3 years ago.

No.


 


The architect emailed me and them a contract to sign. They said they would sign it but it was for me to chase and everything seemed find so I unfortunately left it.


 


The architect emailed them many times and they resisted responding to him despite my instructions that they should deal with him.


 


They would only speak to him on site. I now see this as a deliberate ploy.

Expert:  Alice H replied 3 years ago.
OK. Thanks for your patience.

Even though a written contract is not signed a legally binding agreement can be formed if all the elements required by law are present. In your case there was clearly offer and acceptance to do the work and a price was quoted which you clearly accepted. In the circumstances a court is likely to conclude there was an enforceable agreement.

In relation to the price a court would have to decide whether the quotation was a precise reflection of the actual cost or whether this was a guide price involving an open-ended contract. A guide price is not intended to have contractual effect.

In order to persuade a court that the figure quoted was not a guide price you would have to prove with evidence that the figure quoted was the actual cost. Your account of the agreement supported by the architect will help as will and e-mails and correspondence that you may have.

So, in order for a court to be satisfied that the figure of £137,235.00 was the precise figure for the job you will have to persuade the court that this was indeed the position. You version of the agreement will help. The lack of a seperate VAT breakdown will show and intention that the figure was inclusive of VAT. Lack of VAT invoices and a note of your emails and conversations will also help. From everything you've said so far you should be able to persuade a court of these points.

The builders leaving the job unfinished amounts to a breach of contract. Also its a breach of the Sale of Goods and Services Act 1982 to fail to job with reasonable skill and care. You can deal with this in a number of ways: obtain and injunction for the builders to complete the work - also known as specific performance; sue them for breach of contract for losses incurred including the cost of completing the job or offset such losses and expenses against anything that's oustanding to be paid.

There is a great deal of case law which deals with these situations but nothing which is precisely on the point. However, the guidance I've set out above should give you enough to go back to the builder or their agent with a level of certainty about your legal position.

Hope this helps.

Alex

Customer: replied 3 years ago.

Thanks Alex. I would rate you as good but haven't quite finished. Not able to send the next bit until tomorrow if that is ok?


 


Stephanie

Expert:  Alice H replied 3 years ago.
No problem!

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