Plante v. Jacobs
10 Wis.2d 567, 103 N.W.2d 786 (Conn. 1983)
- 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.