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Homeowner’s Guide to Terminating a Construction Contract

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As a homeowner experiencing problems with a home building project, it would benefit you to know that you have a right to terminate your construction contract. Read on to know the instances when you may exercise that right.

Table of Contents

Construction Contract Termination at a Glance

When am I allowed to terminate my construction contract?

You may terminate your construction contract:

  1. When you and your contractor agree to terminate it.
  2. When your construction contract contains a termination clause.
  3. When your contractor commits breach of contract.
  4. When your contractor repudiates the contract. 

A Quick Look at Each Mode of Termination

Termination by Agreement

You and your contractor may come to an agreement to terminate the contact, either expressly or impliedly. An express agreement to terminate may be done orally or in writing, although the latter would be advisable. An implied agreement would require clear, unmistakable conduct showing that neither you nor your contractor require each other to proceed with the obligations imposed by your contract. 

Termination Clause

Most construction contracts contain several clauses pertaining to termination. In fact, the standard form contracts in NSW such as those issued by:

all contain termination clauses.

These termination clauses give you the power to unilaterally terminate the contract when your builder or contractor commits breach. Additionally, they lay out the

that are needed to effect a valid termination – like the service of Notice of Breach and Notice of Termination.

Termination for Breach of Contract

Regardless of whether your contract contains a termination clause or not, you may nevertheless terminate it when your contractor commits a  breach of:

Termination for Repudiation of Contract

Repudiation occurs when one party, by their conduct, shows that they are unwilling or unable to proceed with their obligations under the contract. Similar to termination due to breach, termination for repudiation does not require that there be a termination clause in the contract.

How We Can Help

If you are currently in dispute with your contractor and would like to explore your options, feel free to give us a call. First consult is absolutely free.

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What do you do if you’ve served your Payment Claim but still remain unpaid beyond due date? Or if the person owing you, insists on paying less than the amount you claim? In this article, we let you in on the different ways to enforce progress payments.

Payment Schedule: What to Expect

Under the Building and Construction Industry Security of Payment Act 1999 (NSW), also known as the Security of Payment Act (“SOPA”), progress payments for construction work performed, or for related goods and services provided, may be recovered by serving a Payment Schedule. More often than not though, the persons required to pay, disagree with the claimed amount. In such case, SOPA requires them to serve a Payment Schedule. Find out everything you need to know about building and construction payment schedules here

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Homeowner’s Guide to Terminating a Construction Contract