Uncertain Terms: Absence Of A Formal Agreement On Construction Projects

Parties who have partnered up for construction projects, but have not drafted a formal contract may face uncertainties about their legal rights when potential issues arise. Although binding contractual relationships may be found in law in the absence of a formal contract, recent case law from the British Columbia Supreme Court and the Alberta provincial court came to opposite conclusions about the conditions under which this is possible.

In Hodder Construction (1993) Ltd. v Topolnisky, 2021 BCSC 666, the plaintiff contractor brought a claim against the defendant homeowner in relation to the construction of a new home. A year into the construction, issues began to arise on the project. Costs began to exceed earlier estimates and the homeowner fell behind on payments. A few months later, the general contractor withdrew from the project, registered a builders' lien, and sued the defendant for $359,400 in unpaid invoices. The homeowner counterclaimed for the