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Company must repay £200,000 after breaching contract

Posted: 2nd June 2011   In: Dispute Resolution, Corporate Commercial

A company must repay £200,000 after failing to carry out work to a high enough standard on a property it was selling.

The company had entered into a contract with a buyer which required that a number of renovation and conversion works should be carried out before completion.

The buyer paid a £100,000 deposit followed by a further £100,000 interim payment once work got underway. However, when the time came to complete the sale, the buyer said some of the work had not been carried out as agreed and refused to proceed.

The seller claimed the work had been done as agreed and refused to do any more. The buyer said this amounted to a repudiatory breach of contract and asked for a refund of the £200,000 it had paid, plus interest.

The court held that the matter boiled down to which of required tasks remained outstanding or had not been completed adequately, and whether any of these deficiencies could justify a claim of breach of contract.

The judge said that the law did not give the buyer total discretion to decide whether or not the work had been carried out properly. The law simply required that the tasks should be completed to a good and workmanlike standard, and meet the buyer’s reasonable expectation.

The court considered evidence from experts on both sides and concluded that the work had not been completed or carried out to these standards and so the contract had been breached.

The buyer was therefore entitled to a full refund of the £200,000 plus interest.

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