When does a home building contract exist?

In our last article Understanding legal rights when building a new home we discussed discussed how important it was to have a good contract with your contractors in place before embarking on building or renovating your home.

In previous articles we also discussed:
Home build and renovation contracts part 1 - what you should know
Home build and renovation contracts part 2 - the rules of the project
Home build and renovation contracts part 3 - What contracts should include
Home build and renovation contracts part 4 - Different types of contract
But when does a contract exist between you and your contractor, and does it have to be in writing?
What could void a contract?
These are important questions.

Does a contract have to be in writing?

For a contract to exist there must be a formal offer which must be accepted in an unequivocal way.

For example: If a painter submits a quote to paint a house and you tell the painter you like the price, it doesn’t mean that you’ve accepted the painter’s price and appointed them to do the work. For a contract to exist you would have to say something to the effect that you accept the quote and would like the painter to undertake the work.

The contract can be verbal which can be as legally binding as a written agreement, though a verbal agreement is often problematic since it’s difficult to prove what was said and agreed.

An offer can be withdrawn before it’s accepted providing the withdrawal is explicit and preferably in writing.
​
Example: To use the same example above, it won’t be good enough if the painter submits the quotation and in later discussion with you says he’s not sure if their price is correct, rather, the painter needs to formally state they’ve submitted the wrong price and are withdrawing their quotation. 

Image by kalhh from Pixabay

What could void a contract

In certain cases a contract may not exist, for example if:

• The contract is fundamentally flawed.
• One of the parties is a minor, mentally impaired, bankrupt, a prisoner, or under duress or unfair influence.
• The agreement includes false statements.
• One of the parties knowingly causes the other party to commit an illegal act.
• There’s a condition precedent (for example if the contract states that you need to obtain finance for the work and you’re unable to do so).
• An act of God makes it impossible to carry out the terms of the contract (for example a builder is contracted to renovate a house but before they start the house burns down).

Nevertheless, it’s important to be familiar with the laws governing the contract as these differ between countries, impacting on whether the contract is legally binding.

Conclusion

It's important you understand when a contract exists between you and your building contractor. Verbal contracts are difficult to police as it's often your word against the contractor's word.

Get an expert to check that the contract is legally enforceable. Of course ensure that the contract is signed by an authorised representative from the contractor. The contract could be null and void if it's signed by their 10 year old child, or a person who is not even employed by the contractor.

Other useful articles
Construction Management: Resolving Disputes Effectively between Owners and Contractor
Before employing a building contractor ask these questions

This is an extract from the author's book 'An Introduction to Building and Renovating Houses: Volume 1 Hiring Contractors, Managing Construction and Finishing Your Home'.
​© 2021 This article is not to be reproduced for commercial purposes without written permission from the author.

---

Want to learn more about designing, renovating and building houses?

​Paul Netscher has written 2 easy to read books 'An Introduction to Building and Renovating Houses - Volumes 1 and 2'. An Introduction to Building and Renovating Houses Volume 1 deals with Hiring Contractors, Managing Construction and Finishing Your Home.  and Designing your ideal home Volume 2 deals with Finding Your Ideal Property and Designing Your Dream Home. 
​("Great for those that DIY. Very helpful in home renovations!" said a Reader on Amazon.com 5*****)
These books are available from Amazon and other online bookstores in paper and ebook.

---