Substantial Performance. Adolf and Ida Krueger contracted with Pisani Construction, Inc, to erect a metal building as an addition to an existing structure. The two structures were to share a common wall, and the frames and panel heights of the new

Question

building were to match those of the existing structure. Shortly before completion of the project, however, it was apparent that the roofline of the new building was approximately three inches higher than that of the existing structure. Pisani modified the ridge caps of the buildings to blend the rooflines. The discrepancy had other consequences, however, including misalignment of the gutters and windows of the two buildings, which resulted in an icing problem in the winter. The Kruegers occupied the new structure, but refused to make the last payment under the contract. Pisani filed a suit in a Connecticut state court to collect. Did Pisani substantially perform its obligations? Should the Kruegers be ordered to pay? Why or why not?

Answer 1

Substantial performance
The court found that Pisani had not substantially performed its obligations under its construction contract with the Kruegers and allowed them to retain the payment due under the contract. Pisani appealed to a state intermediate appellate court, which affirmed the judgment of the lower court. The appellate court said, "Mere use of the building is not enough . . . for substantial compliance to be found." Here, "[b]ecause the building to be built by the plaintiff was intended to be added to an existing building and the plaintiff was aware of that intention, . . . there [was] an obvious need to be concerned with the exact height of the completed new building. Thus, although we might agree with the plaintiff that, in the ordinary case, being a few inches off on the height of the building would not be sufficient to defeat substantial compliance with the contract, in this case the plaintiff knew of the need for exactitude. In addition, any claim by the plaintiff that its failure in that regard . . . did not harm the defendants is defeated by the evidence in the record that . . . the misalignment of the gutters resulted in an icing problem." When "a builder breaches a bilateral construction contract by an unexcused failure to render substantial performance, he cannot maintain an action on the contract to recover the unpaid balance of the contract price because substantial performance, a constructive condition of the owner's duty to pay the balance, has not been satisfied."