If you enter into a contract with a home owner to undertake residential building work and the contract price exceeds $5,000.00, then the Home Building Act provides that any variation must be in writing and signed by both parties prior to the variation works commencing.
If a variation is not in writing and signed by both parties, then a builder cannot claim payment for that variation under the contract and will be left only with a “quantum meruit” claim under the law of restitution.
A quantum meruit claim is a claim for payment of reasonable remuneration for work undertaken that cannot be recovered under an enforceable contract. This means that the builder would, at best, be entitled to the reasonable market costs of the work undertaken, regardless of what the builder asserts was its actual or agreed costs for the works. Such claims come with risks and typically require expert evidence in relation to the reasonable cost of the works. In addition, a home owner may not be liable to pay the reasonable costs of a variation is, for some reason, it would not be just to order them to do so. The award of compensation in motivation is discretionary and can involve complex litigation.
To avoid disputes and risks of not getting paid for works undertaken, we strongly recommend that all variations to the scope of works under a residential building contract be put in writing and signed by both parties prior to any varied works being commenced.
If you need assistance recovering payment for variations or would like help to prepare a standard form of Contract Variation in future, call and speak to one of our experienced Building & Construction Lawyers today.