THE RISKS OF CONTRACTING AND HOME RENOVATION
Home construction and renovation contracts are one of the most common issues reviewed by the Small Claims Court in Ontario and are the bane of contracting companies both large and small who must deal with the stress and economic losses suffered as a result of clients that have design and construction ideas that exceed their budgets or those that for a myriad of reasons decide that they cannot or will not pay for the services they have been provided.
The key to successful home construction from the contractor’s perspective is “to get it in writing”. In other words know what the client wants, what materials they want to use and what time frame they have in mind or that you can realistically complete their job in. As each portion or phase of the envisioned job is complete have the client inspect and sign off on same, if there are changes or extras have them added in writing with all costs specified and agreed to. This will not only ensure that all services and materials are accounted for but also the time constraints if any are clear and unambiguous. If you take the time to clarify your agreement you hopefully will avoid future disagreements, after all it is easier and cheaper to avoid a mess than it is to clean one up as suggested by the Court in the recent decision of Greca v Ndreka Construction Ltd, 2018 CanLII 44844 (ON SCSM) which stated;
The Plaintiff’s and Defendants’ evidence on the terms of the contract were both equally credible and therefore in my opinion the Plaintiff has not been able to establish on the balance of probabilities his position as to the terms of the oral agreement. If the contract would have been in writing and signed by the parties then the terms of contract would likely have been more clearly established.
Without establishing that the terms of the contract are as asserted by the Plaintiff the Plaintiff cannot establish on the balance of probabilities that any money is owed by the Defendants.
However, if it is too late for the above advice, hope is not lost, contrary to the old saying of “a verbal contract is not worth the paper it is written on”, the Courts have and will enforce an oral agreement both for initial construction and in respect to extra’s or unforeseen changes and additions to a construction agreement. The Court’s position in respect to oral agreements is well outlined iin the case of Schrempf v. Willchuk, 2013 ONSC 2863 (CanLII) which stateds;
 On the first issue of whether an oral agreement existed, in Picavet v. Clute, 2012 CarswellOnt 4575 (ON S.C.), Healey J. at para. 9 summarized that where there is no written contract documenting the alleged agreement “the court must examine everything occurring between the two parties that is relevant to the alleged agreement in order to decide whether a contract exists.”
 Paragraph 15 of the decision of Cavarzan J. in Summers v. Sawyer, 2005 CarswellOnt 4001 (ON S.C.), provides as follows with respect to binding oral agreements:
Whether or not a binding oral agreement was formed in the circumstances here is a question which engages what has been called the objective principle of contract formation. As stated in S.M. Waddams, The Law of Contracts (5th Edition) at p. 103:
The principle function of the law of contracts is to protect reasonable expectations engendered by promises.
Further the Court’s have recognized the value of your work even if not completed because of lock out or non-payment. In other words even without a written contract or in those cases where the terms of the construction agreement are disputed or unclear the Courts have and will award payment based on what is referenced as a quantum meriut basis.. This term which is a fancy latin phrase essentially meaning you are entitled to be paid for what you have earned or provided as outlined in the case of Goulimis Construction Ltd. v. Jason Smith, Eva Klein and Bank of Montreal, 2014 ONSC 1239 (CanLII) which states;
 The courts generally will grant recovery on the basis of quantum meruit where a party supplies services and materials to another at their request, encouragement or acquiescence, whether under a quasi-contract or no contract, and where it would be unjust for this other party to retain the benefit. The court in the above noted Rafal decision reiterated this basic proposition at paragraph 30, again referring to the Fridman text:
Quantum meruit will be available if the services in question were furnished at the request or with the encouragement or acquiescence of the opposing party in circumstances that render it unjust for the opposing party to retain the benefit conferred by the provision of the services: Fridman, Restitution, 2nd ed. (Toronto: Carswell, 1992 at 290-92; Nicholson v. St. Denis (1975), 57 C.L.R. (3d) 699 (Ont.C.A.), leave to appeal to S.C.C. refused,  1 S.C.R. x (S.C.C.).