Ending a contract: Building or renovating a house

 

The procedure for terminating a contract should be followed strictly. Builders must be set a period of time to remedy breaches. Wrongfully terminating a contract may make the consumer liable for damages to the builder.

Contractual provisions

Terminating a contract is a serious matter. Consumers should obtain legal advice before terminating a contract. Most contracts provide a procedure for termination that must be strictly followed. Normally the procedure requires the consumer to notify the builder in writing of breaches of the contract and require the builder to remedy the breaches within a certain period of time. If the breaches are not remedied within that period of time the consumer is then required to deliver a second notice terminating the contract.

A consumer who fails to strictly follow the contractual procedures for the termination of a contract may later be found to have wrongfully terminated the contract and be liable for damages to the builder. For this reason, get legal advice before terminating a building contract. For information about obtaining legal services, see Legal representation.

All contracts entitle the builder to terminate the contract in certain circumstances.

Domestic Building Contracts Act

Section 41 of the DBCA provides that a consumer may terminate a major domestic building contract if either the contract price rises by 15% or more or the contract has not been completed within 1.5 times the period it was to have been completed in and the increased time or cost was not reasonably foreseeable by the builder at the time the contract was entered into.

Again, legal advice should be obtained if a consumer proposes to terminate a contract under these DBCA provisions. For information about obtaining legal services, see Legal representation.