Restoration & Refurbishment Question

Penalty clause query - how to calculate

I have a written agreement with another builder that after the grace period, I will levy an "appropriate penalty if the work is delayed for reasons beyond my control". This is the case and despite following the contract and giving him a written notice (by email), the outstanding work which has been highlighted remains.

I was to hold back 15% of the total job but his partner kept demanding more money in order complete some of the work despite me telling him it violates the Agreement. I am desperate with a young family. The work was v slow and I have now refused to pay him and the hold back is now 6%.

Do i simply work out the penalty based on the number of days delayed divided by total job/period or do i review the outstanding works and place a monetary value? Its a total refurb and the outstandings are touch up, unfinished kitchen, completion of bathroom, painting internally/externally, replacement of piping (external),cleaning of roof tiles, cementing floor outside to cover new manhole and some electrics.

Appreciate your guidance.

1 Answer

The first thing I would do is to not call it a penalty clause but a retention, payable 4-6 weeks after completion.
In your case, I would re evaluate with your builder, what is left to do.
Remember most good builders have a monthly account so what materials are purchased one month is payable by end of the following month. So I would gear up the remaining balance so the builder can pay his depts. at the end of the following month.
If the builder needs an interim payment in between, I would suggest that the interim payment does not exceed the value of the materials purchased.
By doing this, the builder has cash flow and you have a completion payment to make.

Answered 15th Mar 2015

Avonvale Developments Building and Maintenance Ltd

Member since 2 Jul 2008

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