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362O: Meaning of substantial breach
or “This explains when a builder's mistake is big enough for you to cancel the building agreement.”
You could also call this:

“This explains how to properly cancel a building contract and what happens when you do.”

When you cancel a contract under section 362M(3)(b) or 362N(2)(b), there are some rules you need to follow. The cancellation doesn’t happen right away. It only takes effect when you tell the building contractor about it. If you can’t reach the contractor, the cancellation happens when you show your intention to cancel in a way that makes sense for the situation.

You can cancel by telling the contractor with words or by doing something that shows you want to cancel. You don’t have to use special words, as long as you make it clear that you want to cancel. But if you can easily talk to the contractor, you might need to cancel in writing if that’s what your contract says.

If your contract has rules about how to cancel in writing, you need to follow those rules if you can easily contact the contractor.

Sections 42 to 48 of the Contract and Commercial Law Act 2017 also apply when you cancel a contract under section 362M(3)(b) or 362N(2)(b). These sections will be changed as needed to fit your situation.

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Next up: 362Q: Building contractor or on-seller must remedy defect notified within 1 year of completion

or “If you find a problem with building work within a year, the builder or seller must fix it for free.”
Next

Part 4A Consumer rights and remedies in relation to residential building work
Remedies for breach of implied warranty

362PRules applying to cancellation

  1. The cancellation of a contract under section 362M(3)(b) or 362N(2)(b) does not take effect—

  2. before the time at which the cancellation is made known to the building contractor; or
    1. where it is not reasonably practicable to communicate with the building contractor, before the time at which the client indicates, by means that are reasonable in the circumstances, the client's intention to cancel the contract.

      1. Subject to subsection (3), the cancellation may be made known by words, or by conduct indicating an intention to cancel, or both, and it is not necessary to use any particular form of words, so long as the intention to cancel is made known.

      2. Where it is reasonably practicable to communicate with the building contractor, subsection (2) takes effect subject to any provision in the contract requiring notice of cancellation in writing.

      3. Sections 42 to 48 of the Contract and Commercial Law Act 2017 apply, with all necessary modifications, to the cancellation of a contract under section 362M(3)(b) or 362N(2)(b).

      Notes
      • Section 362P: inserted, on , by section 56 of the Building Amendment Act 2013 (2013 No 100).
      • Section 362P(4): amended, on , by section 347 of the Contract and Commercial Law Act 2017 (2017 No 5).