Why Did they Stop Working? | Beit Din Eretz Hemda - Gazit | Beit Midrash

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Case: The plaintiffs (=pl) hired a contracting company (=def), who had worked for them in the past, to add on a floor to their home. Def was to work from May until September. The sides signed an itemized price-estimate sheet – the full job was to cost 540,737 NIS. Pl was to pay after certain stages were met, but pl gave the first 100,000 NIS before work started. After serious progress through June, def’s work became sporadic and stopped in Sept., after pl had paid 250,000 NIS, and with the work not close to finished. Def agreed to resume work only if pl gave serious new installments and demanded extra pay for alleged changes pl made to the plans (especially, deciding to suspend parts of the job). After pl refused to pay more before def progressed, def removed their equipment from the site, and pl began supervising the job with subcontractors. Pl has claims based on overpaying, the high price to finish the job, and damages incurred. Beit din proposed hiring an expert to appraise the value of the work done by def and of the work remaining to be done. Pl claimed that it was unnecessary because the price estimate shows the binding price of each part of the work. Def argued that the estimate cannot teach about the details, and that prices should be higher per item since pl decided to cut back on the work. This partial ruling is to decide responsibility for the stoppage of work, which determines who will pay for the expert and will impact other elements of the final ruling.

Ruling: Pl presented a coherent account of the facts and their thinking along the way. Def contradicted themselves and gave illogical answers to many basic questions. Among def’s difficult positions was that the price estimates were highly inaccurate, and, in any case, they never presented a coherent explanation as to how their work could have been worth more than the 250,000 NIS pl had already paid.
Also, before a contractor stops work for periods that will cause them to grossly miss critical deadlines in a manner that will damage their client, they must warn the client and work diligently on dispute resolution. For most of the summer, they did none of this, but just made excuses. Def claimed that they could not continue moving forward because of negative experience with pl’s payments on a previous job. However, they could not corroborate this, and this concern did not find expression in the agreed upon payment terms discussed before work began. Finally, pl presented a recording of a phone conversation in which def said he would proceed if he had money to do so, which he did not have. Pl castigated def for taking their money to use on other projects. Def is heard choking up in silence for a minute, and when pl said he was forced to replace def, def answered "100%."
Pl is correct that def took too much money and demanded even more in order to try to be solvent. This is a morally difficult but hard-to-avoid situation for one with a failing business and does not reflect def’s desire to cheat pl. However, pl was clearly right, and def is responsible for all of the direct and some indirect damage to pl. We will quantify this with the help of an expert def will pay for.