Can a contractor back out of a project due to bad estimates?

The estimates provided by contractors often play a major role in your decision of who to select for the project. Obviously, insurance and reputation are also important, but the total cost to redo your kitchen or add a breezeway that will connect your garage to your living room will also influence your decision.

Some contractors are very aggressive when creating estimates and leave very little wiggle room despite fluctuations in supply prices. If you signed a detailed contract with a contractor or construction company for a home project including a specific price and certain standards or materials, you should have every reason to trust that they will perform that work as you agreed.

Can they just back out of the contract and refund your down payment because they underestimated what supplies would cost?

Companies have to abide by their contracts

One of the risks of filling out a project contract with a client is that the company will commit to a price and then their costs will change. Most businesses protect themselves when quoting project prices by putting a specific time limit on the quote.

Even contracts may declare in a clause that the pricing agreed upon is only valid for 12 months. Provided that you have not caused any delays that have altered the expenses for the company, they don’t necessarily have the option of refusing to follow through with the project.

How can you enforce your contract?

You may need to go to court to move forward with the project. When you have a written agreement with a company and they do not do what they promise, you can potentially take them to court. A judge might order specific performance, which is a means of forcing the other party to fulfill their contractual agreement with you.

A judge could also potentially order the contractor to issue a refund and possibly pay you damages based on cost increases that will have occurred because of the delay. In some cases, taking the first steps to hold a contractor accountable in court will be enough to get them to come to the table and negotiate more reasonably with you.