Homeowner’s Right to Terminate

When am I allowed to terminate my building contract? 

You are allowed to terminate your contract in certain instances provided by law, and in certain instances provided in your contract

Under the Law

The Domestic Building Contracts Act 1995 (the Act) allows you to terminate your major domestic building contract in two instances:

1. During the "cooling-off period," for any reason

Some key points:

How to effect termination:

2. When completion time or costs blow out for unforeseen reasons

You may still terminate your domestic building contract beyond the cooling off period on any of the following grounds:

a. completion time unreasonably exceeds that which was agreed upon, for unforeseen reasons, or

b. costs skyrocket, for unforeseen reasons

Some key points:

How to effect termination:

Under the contract

Most construction contracts contain provisions that detail the rights of the parties in case one of them commits breach.

Specifically, they enumerate the grounds for termination, and the procedure for terminating the contract.

They are usually embodied in a termination clause, or in some cases, in an ADR (Alternative Dispute Resolution) clause.

Termination clause

While a termination clause allows a party to terminate the contract for breach, not all types of breach give rise to a right to terminate. In most cases, the breach must be substantial, for the injured party to validly invoke termination.

How to Effect Termination:

Some key considerations:

ADR Clause

Some contracts require that the parties first undergo Alternative Dispute Resolution (ADR) before they can go about terminating the contract.

How to Effect Termination:

How We Can Help

If you are currently in dispute with your contractor and would like to explore your options, feel free to give us a call. First consult is absolutely free.