In a contract, unless expressly stated, it will be implied that payment will be required on substantial performance.
Policy: Perfect performance is not required because no one would contract if they would be required to redo all the work because it was not absolutely perfect.
Damages calculation:
In cases where there is substantial performance that varies, or is below, the standard contracted, the plaintiff can sue for the difference in value of the work performed and the work contracted
In weighing whether a condition precedent is to be interpreted as a dependent or independent condition the court weigh's the following factors:
weigh the purpose to be served
the desire to be gratified
the excuse for deviation from the letter
the cruelty of enforced adherence
If the condition is interpreted as not requiring literal fulfillment, the condition will be interpreted as a independent condition, breach of which requires the party to pay damages.
If the use is not effected the court can make the difference in value the measure of damages as opposed to the cost of replacing the defect
Contract specified that "all wrought-iron pipe must be well galvanized, lap welded pipe of the grade known as 'standard pipe' of Reading manufacture"
The defendant found out that the pipe, though identical, was not of Reading manufacture
The defendant made him redo the pipe (blast everything and redo it)
The plaintiff wouldn't do it and asked for payment
Defendant wouldn't pay
Issue:
What is the line for trivialness at which point a condition precedent can be effectively said to be performed, even though it has not been performed exactly as written?
Did the plaintiff perform the condition, even though he used identical but different pipes?
Decision:
For the plaintiff
Reaons:
A party to a contract has a duty to full performance
But if there is an omission both trivial and innocent sometimes the party will be able to atone by paying for the resulting damage
The condition in this case appears like a condition precedent the judge states
"dependent conditions, when there is departure in point of substance, will be viewed as independent and collateral when the departure is insignificant" (Collateral?)
What the standard of "trivialness" is not set by a formula
"We must weigh the purpose to be served, the desire to be gratified, the excuse for deviation from the letter, the cruelty of enforced adherence"
These factors determine whether literal fulfillment is to be implied by law
Parties are still free to place specific demands in contracts
The party whose default is unintentional and trivial may be relieved of specific performance if he will offer atonement for the wrong
Hoenig v Isaacs
Ratio:
In contracts that are payable in a lump sum, If the work is complete but defective the purchaser must pay the money, but is able to off-set the payment with a counter-claim based on the defective work.
Facts:
Plaintiff, interior designer, employed by defendant to decorate and furnish defendant's apartment for lump sum.
The payment was due upon completion
The plaintiff completed the work
The defendant refused to pay the balance because some of the articles furnished were defective
Defendant argues the plaintiff to not perform completely
Issue:
In a contract for work and labour for a lump sum payable on completion, can the defendant repudiate liability under the contract on the ground that the work though "finished" is in some respects not in accordance with the contract?
Decision:
For the plaintiff, the defendant cannot repudiate liability but may set-off the price to be paid with a counterclaim
Reasons:
"When a man fully performs his contract in the sense that he supplies all that he agreed to supply but what he supplies is subject to defects of so minor a character that he can be said to have substantially performed his promise, is it, in my judgment, far more equitable to apply the H. Dakin & Co., Ltd. V Lee principle than to deprive him wholly of his contractual rights and relegate him to such remedy as he may have on a quantum meruit
"The price must be paid subject to set-off or counterclaim if there was substantial compliance with the contract"
Sumpter v Hedges
Ratio:
In a contract for payment in a lump sum, where a party refuses to perform a condition precedent required to get paid, they cannot recover for partial performance. Only if there is evidence that there was a fresh contract that would allow the party to recover will the party be able to recover.
If the contract requires a condition precedent be performed, payment will not be required until the agreed condition is performed.
Plaintiff, a builder, contracted to build on Defendant's land two houses and stable for the lump sum of 565
The Plaintiff did a little over half the work and was paid for this
Plaintiff then informed the defendant he had no money, and could not go on with the work
The trial judge found that he abandoned the contract (the condition precedent that the work being completed to receive the lump sum of 565)
The defendant completed the houses and the plaintiff brought an action for work done and material
Received compensation for materials but not for work done
Issue:
If the builder refuses to continue building can he/she receive payment for the work done?
Decision:
For the Defendant,
Reasons:
The contract was formulated so that the payment of 565 was dependent on the condition that the work be complete
If the plaintiff is to recover on the work done in the original contract (which was abandoned) there must be evidence of a new contract to pay for the work done
Question: is Lysaght v Pearson good law? (builder did not abandon but demanded to be paid before continuing on working; court found there was a fresh contract and builder had to be paid)
In order for a new contract to be possible the circumstances must be such as to give an option to the defendant to take or not to take the benefit of the work done.
If there is no option as to whether the defendant will take the work or not, then the court must look to other facts for a new contract
If there is no fresh contract the plaintiff cannot recover on the contract abandoned
