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VIC Sue Contractor for Non-Performance and Misinterpretation?

Discussion in 'Commercial Law Forum' started by hbogyt, 18 June 2016.

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  1. hbogyt

    hbogyt Member

    18 June 2016
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    While working as a fresh intern at a professional services firm, I enlisted the service of a contractor, Mr. X. The email trail clearly shows that X's quote was for 2 services, A and B. X has only provided A and now claims that his quote has been for only A all along. He is now threatening action at VCAT unless I pay him in full.

    From my perspective, the events happened so:

    My client wanted us to arrange a third party provider to supply A and/or B. He also demanded a tender process, in which I must get at least 2 quotations.

    I was not sure what exactly A and B should entail, so I copied the descriptions of A and B verbatim from the client brief into requests for quotes. One of the requests was sent to X, along with the client brief. I explained to him that I was not sure what details A and B contained and needed to rely on his advice on this matter.

    [Some uneventful back and forth later]

    In our last request for quote to him, I clearly listed the A and B as 2 separate items. X gave a price without disputing anything. I presented the 2 quotes to the client and X was chosen on account of his lower price. Shortly after, I also sent him a formal written contract to sign containing the same terms -- A and B. He still has not returned that form. X is a subcontractor. He has no contractual relationship with the client, only with us.

    Some time later, X sent me the finished report of A. When I asked where B was, he claimed that his quote had been for only A all along. He said that based on my client brief and his experience, my client only ever needed A. At no point prior to his engagement did he mention this assumption.

    So far my client has not noticed anything unusual, but still there is the risk of him realising that B is missing. Should he eventually require B, we would be obligated to provide it at no additional cost to the client. If he happens not to require B, he can still sue for the damages due to the misrepresented quote. X beat his competitor with a slightly lower price, but the competitor's quote was actually for A and B and X's one turned out to be for only A. X's competitor's price for only A might have been a lot lower.

    As far as I can see, this issue can be constructed either as a failure to perform contracted services or as fraud (bait and switch). To manage this risk, I proposed to X that we pay a substantial amount now and if the client does not make a fuzz, we pay the rest.

    X comes back to me with a threat of legal action via VCAT.

    Given the above information. my questions are:

    1. Am I justified in withholding part of the fees due to his non-performance?

    2. If I pay X in full now and the client sues us for damages for bait and switch. Can we sue X for misrepresentation and recover the damages the client gets from us?

    Much obliged.
  2. Sophea

    Sophea Well-Known Member

    16 April 2014
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    Hi there,

    Yes, assuming you do have evidence that you accepted a quote which clearly specified it was for A & B and not just A, then you would have grounds to defend your position if he took you to VCAT and/ or to get him to provide B or alternatively pay you compensation for failing to provide what was quoted.

    If your client sues you for damages, yes, in theory, you can join X as a third party to the proceedings and claim what is being claimed from you from X.

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