Constructor made arbitrary agreement, now backing out and not paying.


We had entered into a contract with a house constructor, on the terms that if we back out from the agreement, then we'll pay him double of the amount he had paid to us at the time of signing the contract (ie: 10,00,000x2= 20 lakhs). If he backs out, then he won't be refunded the initial 10 lakhs. 10 days before the date of commencement of construction, he backed out saying that the costs are too high for him. We told him that we won't return the refund. Now, after 3-4 weeks, he has sent a legal notice stating that we refused from vacating the property and that we owe him 20 lakhs for fraud. What to do?

Answers (3)


213 votes

Presuming that such terms were formally laid down in agreement signed by both the parties, you should get a lawyer to reply to the Legal Notice stating your version of facts and that you are not liable to pay the house constructor any money as per the terms of the agreement.

In case of absence of a formal agreement, refer to other proofs and communication that may have taken place between the two parties.


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299 votes

Dear Sir,

This query cannot be answered without examining the contract signed between your and him.

Therefore it would be advisable to meet in person to discuss the case. Please feel free to revert.

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150 votes

The contract needs to be examined before anything definitive can be said. However, on the face of it it appears that you have a very good case for forfeiture of the amount and need only to intimate the contractor in writing of the forfeiture stating the grounds for the same

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