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I am a solicitor in Scotland with experience in building contracts. What kind of contract is it and for what? The builder appears to have run out of money at an early stage? What stage is the contact at and what are the unforeseen costs? What provision has been made in the contract for contingencies?
If he is in material breach you can determine that contract and pay him for work to date less costs to complete which would appear to be more, therefore would not result in any further payment to him. Material breach would be constituted by failure to complete in accordance with the contract. Can you confirm that would be the case?
You have to send a letter saying that you are determining the contract because of his failure to continue and complete it. You will have to get an alternative contractor to work out the costs to complete in order to determine what, if anything remains due to the first contractor. From what you say there won't be if it will cost more to complete than the original budget.
Time is not of the essence unless specifically stated. The time would be what is reasonable otherwise. However, it would not be unreasonable to specify a date whereby the works should be carried out or restarted failing which the contract would have to be determined.