Synopsis of Rule of Law. A party may retract their repudiation unless the other party materially changed position in reliance on this repudiation or the other party indicates that he considers the repudiation to be final.
Issue: Is a contract repudiation effective when the repudiation was retracted prior to the seller’s changing position or notifying the buyer that they believed the repudiation to be final?
Held: No. Judgment reversed and remanded.
A repudiation must be clear and unequivocal.
In the instant case, the Plaintiff’s letter to the Defendant seeking to modify the price term in the contract was not a clear and unequivocal repudiation.
Discussion: The court examined the language of the Plaintiff’s offer and found that it did not amount to repudiation because the offer did not clearly threaten nonperformance. The court analyzed the Restatement (Second) of Contracts to determine whether the repudiation, if there was one, was timely retracted. The court also looked to leading commentators on contract law to find that the weight of authority stood allowed a repudiating party to retract the repudiation before the aggrieved party chose to treat the contract as rescinded or before he materially changed position in reliance on the repudiation. If the aggrieved party did not change position, it must indicate to the repudiating party that it is treating the contract as rescinded. In the instant case, the court reasoned that the Defendant did not change position in that it did not sell the property to another party, nor did it even discuss selling the property to another party. Also, the Defendant never indicated to the Plain
tiff that it was treating the contract as rescinded until after the Plaintiff revoked its repudiation. Further, the court reasoned that even if the Plaintiff had repudiated the contract, he successfully retracted it because repudiation is timely retracted if it is retracted prior to the aggrieved party’s changing position in reliance on the repudiation or if it is retracted before the aggrieved party indicates to the repudiating party that it is considers the repudiation to be final.
Gibson v. City of Cranston: K to become superintendent of school district. Term in K that said there would be evaluation procedures – this was breached, and she resigned. The breach was not material though so she was entitled to damages, but had an obligation to keep performing. She breached K when she resigned so the damages of the initial breach were offset. To be material, the breach must frustrate the entire purpose of the K and make continued performance pointless.
§237. EFFECT ON OTHER PARTY’S DUTIES OF A FAILURE TO RENDER PERFORMANCE
Except as stated in §240, it is a condition of each party’s remaining duties to render performances to be exchanged under an exchange of promises that there be no uncured material failure by the other party to render any such performance due at an earlier time.
Comments....
d. Substantial performance. In an important category of disputes over failure of performance, one party asserts the right to payment on the ground that he has completed his performance, while the other party refuses to pay on the ground that there is an uncured material failure of performance....In such cases it is common to state the issue...in terms of whether there has been substantial performance....If there has been substantial although not full performance, the building contractor has a claim for the unpaid balance and the owner has a claim only for damages. If there has not be substantial performance, the building contractor has no claim for the unpaid balance, although he may have a claim in restitution.
Jacob & Young, Inc. V. Kent
Brief Fact Summary: In this case, pipe of similar quality, but of a different brand name than that specified in the contract, was used in the building of a house.
Synopsis of Rule of Law: Where a contract has been substantially performed and the cost of replacement would be grossly out of proportion to the difference in value, the correct measure of damages is the difference in value.
Issue: Is the difference in value the proper measure of damages when there has been substantial performance of a contract? or said
Would the use of substitute materials, of equal or greater quality to those specified in an agreement, bar substantial performance?
Held: Yes. Judgment affirmed.
The court found that the piping used was of similar quality to the Reading pipe specified in the contract.
The court also found that the failure to use the specified brand of pipe was not intentional or fraudulent, but a mere oversight.
The court also found that the cost to repair the defect would be grossly out of proportion to the difference in property value resulting from the defect. Therefore, the proper measure of damages was the difference in value caused by the error.
Dissent: The dissent argues that the Plaintiff did not perform the contract as specified and the Defendant has a right to have the terms of its contract met.
Discussion: Justice Cardozo began this opinion by examining the difference between promises and conditions. He reasons that where omissions are trivial and inconsequential they may be considered an independent promise and not a breach of a condition. However, some promises are so integral to the substance of the contract that they must be considered a condition of the contract. Whether something is a condition or a promise must be determined by considerations of justice and the intentions of the parties at the time they formed the contract. Justice Cardozo also recognizes that courts look to considerations of “fairness and equity” in determining whether something is an inconsequential promise or a contractual condition. Further, New York courts follow the liberal view and also consider the surrounding circumstances. Specifically, the courts “weigh the purpose to be served, the desire to be gratified, the excuse for deviation from the letter, the cruelty of enforced adherence.” In the
instant case, the cost of replacing the pipes would be great but the difference in value caused by the use of the different brand of pipe would be nominal at most. Also, the use of the different pipe was a result of mere oversight, it was not an intentional or fraudulent deviation. Therefore, Justice Cardozo concluded that the cost of completion would be grossly out of proportion to the good to be attained from correcting the defect.
Decision/Analysis: (Cardozo, J.) The court felt that had the evidence provided by the plaintiff as to the similarity of the pipes made by the different manufactures been admitted, it would have provided a basis for the inference that the defect was insignificant in relation to the project. In this case, an allowance should be made for the difference in value of the structure had the Reading pipe been used rather than the pipe of other manufacturers, which would be nominal or nothing. “The owner is entitled to the money which will permit him to complete, unless the cost of completion is grossly and unfairly out of proportion to the good to be attained. When that is true, the measure id the difference in value.” The order was affirmed, and judgment absolute directed in favor of the plaintiff upon the stipulation, with costs in all courts.
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Relevant Facts: Pl, Mrs. Cope hired Df, Grun to install a new roof on her home. The K describes the color of the shingles to be used as “russet glow,” Df defined as “brown varied color.” Df acknowledged that it was his obligation to install a roof uniform in color. Df originally installed 24 squares. Pl noticed afterward that it had streaks of yellow, due to a difference in color of some of the shingles. Df agreed to remove and replace the non-conforming shingles. The replacement shingles do not match the remainder. The disparity in color has not disappeared in nine or ten months and the roof is not uniform in color. The installation of a completely new roof is needed to produce the uniformity. The roof is a substantial roof and will give Pl protection from the elements.
Legal Issue(s): Whether the Df, Grun, substantially performed the contract when his tendered performance was seriously deficient, and whether Df can recover under Quantum Meruit?
Court’s Holding: No, and No.
Procedure: Jury trial for the Pl, Df appealed. Ct. of App. Affirmed.
Law or Rule(s): A promisor who has substantially performed is entitled to recover, although he has failed in some particular to comply with his agreement.
Court Rationale: One of the most obvious factors in determining whether the performance amounts to substantial performance is the extent of the non performance. The deficiency will not be tolerated if it is so pervasive as to frustrate the purpose of the K in any real or substantial sense. The doctrine does not bestow upon the contractor license to install whatever is in his judgment “just as good.” In the matter of homes and their decoration mere taste or preference, almost approaching whimsy, may be controlling by the homeowner, so that variations which might under other circumstances, be considered trifling, may be consistent w/ that “substantial performance,” on which liability to pay must be predicated. The Pl can secure a roof of uniform color only by installing a new roof. A contractor who tenders a performance so deficient that it can be remedied only by completely redoing the work has not substantially performed his contractual obligations.
There is evidence that the shingles were not properly installed, b/c if so the color would have blended and not streaked. The Pl did not receive a benefit but she will have to install a completely new roof, b/c of Df’s deficiency she will have to pay for a new roof. Pl did not accept the claimed benefit, she complained immediately and thereafter.
Plaintiff’s Argument: The Df did not comply with the provision of the contract, and a new roof needs to be installed to fix his deficiencies.
Defendant’s Argument: The Pl received a benefit of a roof to keep out the elements, the color variation is a slight deviation.
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