Terms and conditions breach dispute

[tradie123]

Hello I would be very grateful for any legal views or case law on this please. I will simplify the issue but it is essentially this. We entered into a building contract. Clients terms and conditions said we are not allowed to use sub contractors. We used them and did not tell them beforehand,. We did the work, then client provided evidence to show we used sub contractors and refused to pay for any of the work. Their terms and conditions do make it clear that a breach means they can terminate/rescind the contract. However, here is the other part. We have since found out that they knew for a fact we would use sub contractors BEFORE they entered into the contract with us.

So the general question is, if a client enters into a contract with a contractor knowing that it breaches their terms and conditions, are they then allowed to use those terms and conditions to claim a breach and not pay? Do those terms and conditions still hold true? Seems a very sneaky way to get free work.

[R0b]

Hello.

First of all, I have little sympathy for you if you chose to ignore the terms and conditions. Irrespective of whether they knew you were going to use subcontractors, the contract states you are now allowed to - that governs your relationship. Why didn't you just say you would have to use subcontractors and tell them up front who they were and build it into the contract?

Asking questions about a contract is difficult if we have to speculate what the terms say, but let's assume the contract says they will pay you for the work, then they can't refuse to pay you if the work has been done and that would put them in breach of contract.

Thats assuming the contract says if you breach the contract then they get the work done for free which would be very surprising and probably an unfair contract term. They could claim damages for breach of contraxt but then they would have to prove their losses - work has been completed so there doesn't seem to be any loss, right?

So in short, based on what you've described, the fact you breached the obligation not to use subcontractors does not negate the fact that you are entitled to be paid for the work. It would be classed as a debt and I you should be able to issue a claim then make an application for summary judgment since they wouldn't have any defence.

[tradie123]

Hello.
Thats assuming the contract says if you breach the contract then they get the work done for free which would be very surprising and probably an unfair contract term. They could claim damages for breach of contraxt but then they would have to prove their losses - work has been completed so there doesn't seem to be any loss, right?

So in short, based on what you've described, the fact you breached the obligation not to use subcontractors does not negate the fact that you are entitled to be paid for the work. It would be classed as a debt and I you should be able to issue a claim then make an application for summary judgment since they wouldn't have any defence.

Thanks for your response (wasn't looking for sympathy I know I been stupid!) This is an important point. No the contract doesn't say they get work for free. In relation to not paying for work done, they don't make any reference to the contract in correspondence with us, they said this:
"In circumstances in which the contract has been terminated and/or rescinded it is denied that we are obliged to pay the alleged or any sums to the contract or any of the alleged invoices claimed are due or payable". Is there any legal basis to this? Does the word 'rescinded' change anything? Ihe contract also say this if it is of any use: "The termination of the Contract shall not prejudice or affect any right, power or remedy which has accrued or shall accrue to either Party prior to or after such termination or expiry"

Yes there are no losses on their part. On the contrary they have got work for free.

[R0b]

Well it depends on whether they rescinded the contract or terminated it. Rescission of contract essentially extinguishes the contract and puts each party in the position before the contract was entered into.

So if they have rescinded the contract then they should be put into the position before work was carried out. If that is impossible then damages are awarded in lieu.

However, what you referenced could mean that rescission does not affect your right to being paid. Again, it comes down to the terms and conditions and what they say and which you have not shared.

I would suggest you upload a copy of the terms in full so we can review them and take it from there. Otherwise this is all speculation and doesn't really help your situation.