Plante
entered a contract to build a house for Jacobs for $26k.During the construction, Jacobs
paid $20k but then disputes arose.Jacobs refused to pay the last $6k and Plante refused to complete
the work.Plante sued to
recover his lien, and Jacobs
countersued for damages due to faulty workmanship and incomplete
construction.
For
example, the wall between the living room and the kitchen was misplaced,
making the living room one foot shorter than specified.
The
Trial Court found for Plante.Jacobs appealed.
The
Trial Court found that the contract was substantially complete.They determined what specific parts of the work were defective
and/or incomplete, subtracted the costs for those items, and gave Plante
$4k.
Jacobs
unsuccessfully argued that Plante should not be able to recover any
amount because he had failed to substantially perform the contract.
The Appellate
Court affirmed.
The
Appellate Court found that substantial performance as applied to construction of a house does not
mean that every detail must be in strict compliance with the
specifications and the plans.Something less than perfection is the test, unless all the details
are made the essence of the contract.
Although
Jacobs got a house which he was dissatisfied with in many respects, the
Trial Court was not in error in finding the contract was substantially
performed.
For substantial
performance, the plaintiff should
recover the contract price less the damages caused by incomplete
performance.The rule for
damages due to faulty construction amounting to incomplete performance, is
the difference between the value of the house as it stands and the value
of the house if it had been constructed in strict accordance with the
plans and specifications.
This
is known as the diminished value rule.
Note
that the diminished value rule is
different than the cost of replacement or repair!
Compare
this case to the similar cases of Groves v. John Wunder Co. (286 N.W. 235 (Minn. 1939)) and Jacob & Young v. Kent (129 N.E. 889 (N.Y. 1921)).
If a
contract is substantially performed,
that means that all of the provisions that are conditions have been met, the only breach is provisions
that are promises.If a condition is breached, the other party is allowed to walk
away from a contract.If only
promises are breached, then
the other party is still obligated to perform, but they may sue for
damages due to the breach.
