The Building Forum’s online discussion site includes a page where members can ask advice from fellow professionals. This latest is about non-payment.

Myself and work partner do partitioning and ceiling fixing, and we are operating as a limited company. We have recently completed an eight-month project for our contractor, and now that it’s time to settle our account there seems to be a dispute over amounts owed.

According to the contractor, we have over-invoiced. Our position is that the contractor in question owes US money! All our measurements and amounts have been scaled from drawings as well as site measured, with the difference being nominal. How do we go about getting them to pay the money and, if it came to it, are there any legal avenues we could go down to retrieve the outstanding money? As there is no written contract, just a verbal agreement, do we even have a leg to stand on?
Craig Radcliffe

Seek legal advice by all means but first: from what you have told us I would perceive you to be very naive with regard to contracting. Always (there is no exceptions) confirm your quotation and terms to the client.

The difficulty you may have is that you have no way of proving what you have quoted - am I right? If your figures are only verbal then the client can mishear you - 15 sounds like 50 - or the client can easily think you have quoted a figure that you have not.

On the other hand, an unscrupulous QS may be playing on your apparent naivity and be trying it on, hoping you walk away, or just accept the argument and take a reduction in payment.
First and foremost, find out why they think you have over invoiced and by how much. Could be that you have made a mathematical error, or perhaps forgetting to deduct a discount, or a retention?

It may be that the difference between you may be so small that it is not worth arguing over. Remember such legal action can also lose you a client. Sometimes it pays to swallow your pride and take a small hit.

It seems that your works could be classified by statutory law as a construction contract. Therefore, the payments schedule under the Construction Act could apply.
You need to do two things:

  • Remeasure of all the works completed as per specification to substantiate your final account
  • Ask the client why they are withholding.

I sense the client is not refusing to pay in general, but is merely disputing the final amount. Hope this helps.
Patrick, Help with Disputes

Patrick, that is all well and good, but if the subbie cannot prove his quote or the values thereof, how can he substantiate a claim?
Sure he will have a contract, even if it is a verbal one, inferred by the fact that he has done the work, and the client is claiming “overcharge” not “not ordered”. But if there are no figures on record how does either side prove the point?

I still believe that Craig has either misunderstood or miscalculated his due payment. Furthermore, if the contract is subject to re-measure, is it not reasonable to measure the work, not scale from drawings?

I’d add the following points to the above. You should, of course, seek your own legal advice.

Yes, you do have a contract with the main contractor on the basis of them accepting your offer to perform the work, and the fact they paid you for (some of) it. If I remember correctly, these are the three elements (offer, acceptance and consideration) for a valid contract.

  • The problem you have is that nobody knows exactly what’s in the contract, which is why we have written contracts. There is legal precedent for implied terms in contracts such as these based on customary practices, but you’d have to show a court that the customary practice is “notorious, certain, legal and reasonable”, so specifics of how a job is to be measured will probably not fall into that category.
  • My advice to you would be to meet with the contractor, as calmly as possible, and get them to explain exactly where they think you’ve over-invoiced and how they’ve measured progress. If they’ve been reasonable in this (rather than trying to screw you) you probably don’t have a leg to stand on. If not, negotiate with them as much as you can. Talking is almost always better than dealing with lawyers.

In future, make sure you have a written, signed contract. That’s why we have them - to make sure everything is clear to everybody from the outset.
(Disclaimer: I’m not a lawyer, and I’m Australian, so get your own legal advice.)
Jason Langenauer, managing director, Constrex Australian