We look at how the Covid-19 outbreak will affect ongoing building projects for homeowners where they have instructed a builder but there is no detailed contract in place.
For smaller projects, it is common for builders to work in line with a written or verbal quote.
These are truly unprecedented times which could have a serious impact on the progression of building works. While the government has advised people not to move house during the current crisis, there is at the time of writing (3 April 2020) no strict prohibition on building projects carrying on in England.
However, building projects may be in breach of the government’s guidance if they involve:
What if the Builder or Homeowner wants to terminate the building works?
Where there is no written contract, there will be no ‘force majeure’ clause that the parties can rely upon to terminate the contract. Force majeure (French for ‘greater act’) is not a standalone concept in English law so it cannot be relied upon unless there is an express contractual term.
There is however, the common law doctrine of ‘frustration’ which a party could (in theory) rely upon. Frustration occurs if something happens which renders the contract impossible to complete. A frustrating event would transform the parties’ obligations into something that could not be foreseen when entering into the contract. If a frustrating event occurs, the contract is terminated without blame and it excuses the parties from further performance. Claims that existed up to the point of frustration will be preserved.
There is a very ‘high bar’ to frustrate a contract. It is more likely that building projects will be delayed by corona rather than frustrated. It would be an extreme case to achieve frustration, for example, a contract for personal service where that person was prevented from travelling to the project site due to a travel ban.
Where there is no completion date in a written contract, there is an implied term that the works will be completed within a ‘reasonable time’ (section 52 Consumer Rights Act 2015). What constitutes a reasonable time will depend on the circumstances. Periods of illness, self-isolation and delays in the supply chain specifically caused by Covid-19 could all constitute a reasonable delay. This may turn a 3 month project into a 6 month project.
Most people will have a quote from their builder to perform the works in question. If there is no express agreement about costs, the builder is entitled to charge a ‘reasonable price’ (s.49 Consumer Rights Act 2015). This sum is a question of fact. If alternative (more expensive) supplies have to be sourced due to export restrictions or supply chain issues, an increased price for the works could be deemed reasonable.
The corona crisis will pose serious challenges for the construction industry. Many complex issues will likely arise as a result. Westminster could insist that all construction projects in England could be suspended save for a list of specifically excluded projects (such as hospital building). The Scottish government have already advised all construction sites in Scotland should close.
If you have concerns about your building project please contact James Murray, Solicitor, at email@example.com
This article provides information only and is not intended to comprise legal advice. Please get in touch if you want specific advice for your circumstances.