Quiz 17: Performance and Discharge in Traditional and E-Contracts
The court holds that Kent was entitled to the amount of money which would allow him to fix the error of the contractor. However, when that amount is disproportionate to the actual value of the difference, then the owner is only allowed the actual difference. Here, the owner is entitled to difference in value of the two pipes, not how much it would cost to demolish the house and begin construction again.
Generally, since the owners of the house specified a particular brand and the contractor failed to follow the term of this contract, the contractor is in breach of contract. However, they did substantially perform their part of the contract if the following requirements have been met. For instance, if the contractor knew that a certain pipe was unavailable when they signed the contract, but did so anyway, this could be considered bad faith and they would not be entitled to payment. Furthermore, it could have been impossible to perform the contract under the terms because this pipe company had closed and they could not purchase the pipes. It also depends on whether the court views this as a substantial breach of contract. If it considered a substantial breach, then the owners can recover for the amount that it would take to reinstall the correct pipes. However, the court will probably find this a trivial issue and grant the owner the difference in the value of the two types of pipes.
Here, the contractor in charge of building the house did not purposely use the wrong pipes or use pipes that he had a reason to know were incorrect. Rather it was the oversight of the subcontractor and when the project was evaluated by the contract, the difference was so slight (just minor imprints on the pipes) that it was overlooked. Because the contractors were acting in good faith, they have substantially performed their part of the contract.