Question:
We did a job for a customer who was unhappy and called another company a day later to look at our job. The other company said we did not do the job correctly and the customer had them correct the job. The customer called and said that we owed her a complete refund. However, our contract states that we must be notified and be given the opportunity to fix the problem or defective work first, before hiring another firm to perform the work. Do we have to give the customer a full refund?

Answer:
There is a theory in the law dealing with major breach and minor breach. A major breach of contract means that the one that breached has no rights under the contract whatsoever. A minor breach means that there may be some deductions from what one would receive, but the one who breached the contract would still have rights under the contract.

In this case, depending on how bad the work was, the contractor might be fired and be left with no recourse against the owner. If he is fired but has not committed a major breach of the contract, the contractor could sue the owner and obtain damages, but may have a reduction in his recovery as a result of the minor breach.

The second part of the question deals with whether the owner could recover the money paid to the contractor. This would again turn on how bad the work was. If the work was very bad, resulting in a major breach, then the owner could kick the contractor off the job and then sue to recover for the owner’s damages, and the contractor would get nothing. The owner would not necessarily get a refund from the contractor. The owner would have to prove that he was damaged, the extent to which he was damaged, and compare that to the amount paid to the contractor.

This is not clear-cut. It is complicated, and the matter should be discussed with an attorney who would have all the facts.

Sam Abdulaziz is a partner in Abdulaziz & Grossbart, a North Hollywood, Calif., law firm specializing in construction law. Abdulaziz has over 30 years of experience representing contractors in his practice. He is also a popular lecturer on construction law topics. The firm’s Web site is www.aglaw.net.

Note: This feature is intended only as a forum for information and general discussion. Any information provided is not in the nature of legal representation and is not intended to establish any attorney-client relationship. Any information provided should not be relied on without consulting an attorney to discuss the specific facts relevant to your situation.

Publication date: 05/31/2004