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CalAttorney2
CalAttorney2, Lawyer
Category: Consumer Protection Law
Satisfied Customers: 10238
Experience:  I am a civil litigation attorney representing individuals and businesses.
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Can a contract basement foundation repair be rescinded due

Customer Question

Can a contract for residential basement foundation repair be rescinded due to contractor error in defining contract specifications?
Submitted: 1 year ago.
Category: Consumer Protection Law
Expert:  CalAttorney2 replied 1 year ago.

Dear Customer,

What kind of error was made?

(Are you the homeowner trying to cancel the project because of something wrong with the way the problem with your basement was presented??, or are you a contractor trying to cancel because you underbid the project?? or something else?)

Customer: replied 1 year ago.
says I am the homeowner. The contractor has informed me that the repairs cannot be done in the manner they specified in the contract. The specifications provided by the contractor's structural engineering firm would interfere with the underground electrical and natural gas utility lines. The conxtractor was responsible for requesting that the utility lines on my property be marked by the city. This was not completed until the same day the contractor was supposed to start the repair work. It was then that the contractor realized that the work could not be done as specified in the contract and in the building permit the contractor was required to obtain from the city. The contractor wants to completely change the method for performing the repairs. The contract as written requires any changes to the original specifications have to be approved by the homeowner. I do not approve of these changes as they are not the preferred method for correcting the problems with the foundation, and I will incurr additional out of pocket expenses due the additional required drywall removal required by the revised method of repair. I want to void the original contract due to the contractors specification errors and receive my $1,000 deposit paid at the time the contract was signed. The contractor says the deposit is nonrefundable after the intial 72 hour cancelation period expired when the contract was signed. Hope this explains my concern more clearly.
Expert:  CalAttorney2 replied 1 year ago.

It does, thank you.

This type of error can constitute a basis to cancel the contract as the party responsible for identifying the terms failed to specify a material term (contractually significant or important term for the purposes of entering into the contract).

The key issue here is that the contractor was responsible for identifying the scope of repair prior to completion of the contract, and he failed to do so.

This is very different from a "change order" or "unforeseen circumstance" that may arise in the normal course and scope of construction (for example, if a very large rock were to be discovered in the course of excavations - requiring additional labor or machinery to complete the work).

In the first instance (the contractor failed to do his job in the first place), you have a couple of defenses (claims to get your money back): (a) There never was a valid contract as there was no "meeting of the minds" - not all material terms were identified; (b) the contractor breached the contract by failing to perform his work at the time specified - his breach entitles you to terminate the contract and recover your money; and (c) equitable theories of recovery ("fairness") including estoppel would apply here - meaning that the contractor cannot create a contract with terms allowing him to expand them unilaterally in the future (there are likely other claims, but these are the major ones that appear based only on a review of the information in this brief "Q&A").

In the second instance (the hypothetical contractor did his job, but an unexpected problem occurs - such as the large underground rock), you would be expected to approve these reasonable contract changes, and/or pay for the contract terms as agreed (I don't have your contract, so I don't know what the provisions would be for you specifically, there is no "blanket" provision), but I do hope that this distinction between an unforeseen change and one in which the contractor failed to do his due diligence helps make the liability clear and gives you something to work with.

There is a series of escalating things you can do to deal with this situation.

  • *First: start with the contractor's customer service (if they have one - if not write directly to the contractor) and dispute the claim. Keep your complaint in writing. If you speak to someone by phone, follow up promptly with a "confirmation letter" (see my note below). I understand you are already disputing this matter verbally - Make sure you are keeping your dispute in writing, not only does it build a paper trail, but carefully written letters are often more effective at getting something done than simply sending emails or making calls.
  • *Second: (you can do this at the same time), if you paid by credit card (not debit card) you can open a dispute with your credit card carrier (follow the instructions with your credit card company). (Some banks do allow for charge disputes on your debit card - but not all, the laws are not the same and debit card purchases do not have the same protections, if you paid by debit card, contact your bank and see if they do have dispute resolution remedies).
  • *Third: open a dispute with the BBB. The BBB offers consumer dispute resolution that is fast, free to consumers, and is usually effective, they have no enforcement authority, but all BBB disputes result in a public report regarding resolution so businesses do respond to them. You can open a BBB dispute here: bbb.org/consumer-complaints/file-a-complaint/get-started
  • *Fourth: if you believe that the company is acting fraudulently (not just charging high rates), you can report them to the state Attorney General. The AG's office does not prosecute individual claims (so they will not get your money back for you), but they will investigate and potentially take administrative and/or criminal action against the company.
  • *Finally: you can file a small claims action against them for breach of contract. Small claims actions take approximately 3-8 months to go to trial. There is no guarantee of success in these disputes, but filing a small claims action does open an opportunity to negotiate a resolution (in addition to the above opportunities and can lead to mediation - many courts offer mediation programs for their small claims docket).

Confirmation letters: Keep written records of all communications - so if you speak to someone by phone, promptly send a follow up "confirmation letter" summarizing your conversation, who you spoke to, when, and any agreements you reached. Keep copies of your outgoing correspondence, as well as anything that you receive.

I wish you the best of luck with this dispute, and hopefully a speedy resolution.

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