Investment Properties, Inc., hires Justus Construction Company to renovate the interior of Investment's office building. Justus submits plans that Investment approves. Justus completes the major reconstruction, paints the interior, and buys the fixtures and furnishings. Investment rejects some of the furnishings because they do not match the plans, and subsequently refuses to allow Justus to finish the work or to collect payment. Could Justus sue successfully for payment for the entire contract?
What will be an ideal response?
No, but Justus could sue successfully to collect for the value of the work actually performed. When the performance on a construction contract is substantial, the deviations are minor, and the failure to perform completely is not willful (that is, the performance is in good faith), the party who substantially performed is entitled to collect payment for that performance. The amount of the payment is the contract price less the costs to make the performance complete. When the cost to complete the performance is high in relation to the contract price, the party is entitled to the contract price less the amount by which the object of the contract is diminished in value by the failure to completely perform. In this problem, the "breach" may have been so minor that it was no breach at all, because Investment was not denied the benefit of its bargain by Justus's conduct. In that case, Investment rejected Justus's good faith tender of complete performance, and this rejection would allow Justus to collect payment for the work.
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