This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
The theory of substantial performance is that there is performance which, on the one hand, is less than strict and literal performance,1 but which, on the other hand, is so close to strict and literal performance that it can not be regarded as breach.2 The amount which the party who has performed substantially is entitled to recover should therefore be something less than he would have been entitled to recover in case of strict and literal performance; but on the other hand the consequences of breach ought not to attach to substantial performance.3
In most jurisdictions this distinction is observed. On the one hand, the party who has performed substantially is not entitled to recover the full contract price.4 On the other hand, the contract price with necessary deduction should be the basis for the amount of recovery and it is not proper to fix the amount of recovery at the value of the performance to the owner.5
11 For this distinction, see Dan forth v. Freeman, 69 N. H. 466, 43 Atl. 621.
See also, ch. LXXXIV.
12 See Sec. 2784.
1 See Sec. 2778.
2 See ch. LXXXIV.
4 Keeler v. Herr, 157 111. 57, 41 S. E. 750. See however, Brown v. Needles, - In. - , 170 N. W. 804, where the adversary party refused to allow fur-ther performance.
If the contract has been performed substantially, and deviations from strict and literal performance of the contract have been made, which are comparatively immaterial and which are not made willfully or in bad faith, the party so performing can recover the contract price, less the amount of damages caused by such deviation.6 Where interest may be allowed as damages, the measure of recovery is said to be the contract price less the damage due to defective performance, together with interest thereon.7
5 Hayward v. Leonard, 24 Mass. (7 Pick.) 181, 19 Am. Dec. 269.
This is sometimes explained as equivalent to the value of the performance to the owner, "although the true measure of damages, where an action will not lie upon the contract, is the additional value to the land of the defendant by reason of the labor performed and the materials furnished by the plaintiffs (see Gillis v. Cobe, 177 Mass. 584), yet this value may in many cases be ascertained by deducting from the contract price what the house was worth less to the defendant by reason of the deviations from the contract. Hay ward v. Leonard, 7 Pick. 181; Walker v. Orange, 16 Gray 193; Cardell v. Bridge, 9 Allen 355; Powell v. Howard, 109 Mass. 192; Cullen v. Sears. 112 Mass. 299; White v. McLaren, 151 Mass. 553; McCue v. Whitwell, 156 Mass. 205, 207." Norwood v. Lathrop, 178 Mass. 208, 59 N. E. 650.
6 United States. Kauffman v Raeder, 108 Fed. 171, 54 L. R. A. 247, 47 C. C. A. 278.
California. City Street Improvement Co. v. Kroh, 158 Cal. 308, 110 Pac. 933; Jones Steel Co. v. Abner Doble Co., 162 Cal. 497, 123 Pac. 290.
Connecticut. Morehouse v. Bradley, 80 Conn. 611, 69 Atl. 937.
Illinois. Bloomington Hotel Co. v. Garthwait, 227 111. 613, 81 N. E. 714;
Peterson v. Pusey, 237 111. 204, 86 N. E. 692.
Iowa. Old Settlers' Inv. Co. v. Marshall Vinegar, Pickle & Soap Co., 137 Ia. 558, 113 N. W. 326.
Louisiana. Dugue v. Levy, 114 La. 21, 37 So. 995.
Maine. Hattin v. Chase, 88 Me. 237, 33 Atl. 989.
Minnesota. Peet v. East Grand Forks, 101 Minn. 518, 112 N. W. 1003.
New Jersey. Korman v. Livesey, 91 N. J. L. 699, 103 Atl. 381.
New York. Crouch v. Gutmann, 134 N. Y. 45, 30 Am. St. Rep. 608, 31 N. E. 271.
Ohio. Goldsmith v. Hand, 26 O. S. 101; Kane v. Stone Co., 39 O. S. 1.
Oregon. Edmunds v. Welling, 57 Or. 103, 110 Pac. 533.
Pennsylvania. Morgan v. Gamble, 230 Pa. St. 165, 79 Atl. 410.
Utah. Foulger v. McGrath, 34 Utah 86, 95 Pac. 1004.
Virginia. Smith v. Packard, 94 Va. 730, 27 S. E. 586.
Wisconsin. Foeller v. Heintz, 137 Wis. 169, 24 L. R. A. (N.S.) 327, 118 N. W. 543.
See also, as to damages for delay in performance, Van Buren v. Digges, 62 U. S. (11 How.) 461, 13 L. ed. 771.
7 Healy v. Fallon, 69 Conn. 228, 37 Atl. 495.
In some of the cases a distinction has been suggested between cases of substantial performance in which the deviation from strict and literal performance consists of omissions merely and in which strict and literal performance can be obtained by supplying such omissions, and cases of substantial performance in which the deviation from strict and literal performance runs through so much of the performance that has been tendered that strict and literal performance is not possible without a very material reconstruction. If the deviation from strict and literal performance consists of omissions rather than of defects in performance, so that strict and literal performance can be furnished by supplying such omissions, the amount of such damages is usually said to be the expense of furnishing complete performance of the original contract strictly and literally.1 If the deviation from strict and literal performance runs through the entire performance of the contract, so that strict and literal performance can be furnished only by a destruction of the work which has been done, and a reconstruction in accordance with the terms of the contract, and if such performance is nevertheless such a compliance with the terms of the contract that it can be regarded as substantial performance,9 the amount of recovery is said to be the contract price less the diminished value of the performance to the owner by reason of such defects.10 This rule has been adopted where a concrete floor was constructed in a defective manner; but in this case each party requested a similar instruction, and the real point decided was that even if such instruction were erroneous, a party at whose request it was given could not complain of error in giving it.11 If a defect in construction can be corrected by making comparatively slight additions and changes, the property owner can not recover the cost of entire reconstruction.12 If a contract for constructing a concrete floor is performed substantially, but not literally, the property owner is not entitled to the cost of resurfacing the floors unless such resurfacing is a reasonable and practicable method of correcting such defects.13