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Unpaid Invoices and Contract Law: Quality of Goods and Services, Completion of Contract, and a Reasonable Invoice

Posted on 27 January, 2018 at 19:10

In my last post, I introduced the topic of unpaid debts, and addressed the first common justification provided for failure to pay. There are three other common reasons that I wish to address, including disputes over the quality of goods and services provided, disputes about the completion of the contract, and the reasonableness of an invoice.

A common area of dispute between a consumer and a goods/services provider is that of quality of the work or services provided. Aside from any specific duties made in the contract between the parties, there are also common law duties to ensure that goods and services are adequate. These duties have been developed over hundreds of years, and have been modified by provincial and federal laws passed by Parliament or the Legislative Assembly.

The principal of Caveat Emptor or “let the buyer beware” is a traditional contract law concept that required a buyer to satisfy themselves as to the quality of the goods and services that they are purchasing. While this principal is sometimes applied in a modern context, it is not practical to require a modern consumer to take on the responsibility prior to purchase. As a consequence, this principle is not usually applicable in the modern context, and has been modified or discarded in most circumstances. It has been recognized that goods purchased must usually be of a reasonable merchantable quality. Additional rights may be applicable depending on warranties made by the seller, or where the seller was asked if the goods would be suitable for the purpose that the buyer had in mind. Similarly, where services are provided, they must also be of reasonable quality. For example, contractors and skilled tradespeople must use reasonable skill in doing their work; including compliance with applicable building standards (see my previous article on contractors and reasonable quality). Skilled tradespeople are expected to provide competent work and materials that are compliant with the standards of their trade. Additional duties may apply where the nature of the contract or the task requires it. For example, a contractor for the installation of costly imported marble would potentially need to take greater care than the minimum standard to ensure proper installation, in contrast to a contractor installing linoleum.

Another area of dispute is the completion of the goods or services provided. The Court will not award damages and a party is not entitled to claim damages for goods or services that have not been completed. This would be fundamentally unfair. Quite frequently, in disputes of this type, some work has been completed, but other steps have not been completed. In these circumstances, the Court will usually decide how much the goods and services which have been provided are worth, and require payment of this amount.

Another area of dispute is the reasonableness of the debt. Usually, the parties agree on the amount which is reasonable for the services provided, and the Court will not usually replace this with their own judgment of the matter. The court will take action in some of these disputes where the amount of the charge is more than what was contracted for, where the charge is excessive or unconscionable. Under the Consumer Protection Act, a charge for a consumer transaction may not be more than ten percent (10%) in excess of the amount quoted. Of course this may not apply if following a quote, the scope of goods or services provided drastically changes. If you are a contractor or service provider, it is your responsibility to make sure that any estimate you give is realistic and accurate. The consumer is entitled to rely on the estimate made. I should also note that misrepresenting the cost or nature of goods or services may also give rise to a claim of misrepresentation.

This article is intended to provide a vignette of knowledge about unpaid debt claims and how they are dealt with by the Small Claims Court. I cannot fully summarize the law in a short article like this, nor would it be appropriate to do so. If you need assistance with a specific case, contact us for legal advice.

DISCLAIMER: This article is intended as general information, and does not replace the advice of a Licenced Paralegal or Lawyer. For advice on your specific case, contact Greanya Legal Services directly.

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