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Builder ordered to repay £483,000 following breach of contract

Posted: 22nd June 2016   In: Corporate Commercial

A builder has been ordered to pay £483,000 for breach of contract after failing to carry out repair work to the specified standard.

He was also ordered to return £200,000 after fraudulently inducing a customer to enter into a share purchase agreement.

The case involved a wealthy individual customer who engaged the builder to carry out extensive refurbishment on two properties. The customer made regular payments to the builder as the work was carried out.

The builder then persuaded the customer to invest £200,000 in his company in return for 37% of the shares. After receiving the money, the builder ceased work on the refurbishment of the two properties.

An independent survey revealed that the work carried out was not up to the standard agreed and had been done at grossly inflated prices. The builder agreed to complete the work to the correct specifications but then refused to continue unless further payments were made.

The customer regarded this as a repudiatory breach of contract.

The court found in favour of the customer. It held that the builder was not entitled under the terms of the contract to suspend work in the way he did. He was ordered to pay damages of £483,000 plus £5,000 for the distress and inconvenience caused.

He was also ordered to return the £200,000 share investment because he had deliberately inflated the value of the company by lying about the number of contracts it had in the pipeline.

Please contact Simon Porter if you would like more information about the issues raised in this article or any aspect of contract law.