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.
If the thing which is tendered in performance is not of a substantially different character from that which is prescribed by the terms of the contract, but there is a substantial deficiency in quantity, or in quality, or in time of delivery and the like, the question is presented as to the effect of the acceptance of such performance by the party to whom it is offered, upon his right to recover damages for such breach. In such cases, no consideration for waiving damages exists and the defective performance has not been induced by the previous acts or representations of the party not in default. The question, therefore, is whether the mere fact of accepting defective performance waives the right to maintain an action for damages. Such acceptance waives the right to treat such breach as a discharge of contract liability, on principles of election, but from the nature of the case no such reasons exist for treating such acceptance as a waiver of the right to maintain an action for damages and the weight of authority is that it is not such a waiver.1 Waiver of the right to treat the contract as discharged and waiver of a right of action for damages are two different rights which should not be confused because each is called "waiver."2
11 Brent v. Head, 138 la. 146, 16 L. R. A. (N.S.) 801, 115 N. W. 1106.
12 Industrial Works v. Mitchell, 114 Mich. 29, 72 N. W. 25.
13 Utah Lumber Co. v. James, 25 Utah 434, 71 Pac. 986.
14 Flannery v. Rohrmayer, 46 Conn. 558, 33 Am. Rep. 36.
Arkansas. State v. Arkansas Brick & Mfg. Co.', 98 Ark. 125, 33 L. R. A. (N.S.) 376, 135 S. W. 843.
California. North Alaska Salmon Co. v. Hobbs, 159 Cal. 380, 35 L. R. A. (N.S.) 501, 113 Pac 870.
Connecticut. Flannery v. Rohrmayer, 46 Conn. 558, 33 Am. Rep. 36.
Georgia. Cannon v. Hunt, 116 Ga. 452, 42 S. E. 734; North Georgia Milling Co. v. Henderson Elevator Co., 130 Ga. 113, 24 L. R. A. (N.S.) 235, 60 N. E. 258.
Illinois. Underwood v. Wolf, 131 III 425, 19 Am. St. Rep. 40, 23 N. E. 598.
Iowa. Rice v. Friend Bros. Co., 179 la. 355, 161 N. W. 310 [reversing judgment on rehearing, 146 N. W. 748]; Rhynas v. Keck, 179 la. 422, 161 N. W. 486.
Massachusetts. Dondis v. Borden, 230 Mass. 73, 119 N. E. 184.
Minnesota. Gray v. New Paynes-ville, 89 Minn. 258, 94 N. W. 721.
Mississippi. Bowers v. Southern Automatic Music Co., 114 Mies. 25, 74 So. 774.
New York. Brady v. Cassidy, 145 N. Y. 171, 39 N. E. 814;
Oklahoma. Wallace v. Clark, -Okla. -, 174 Pac. 557.
Oregon. Feeney & Bremer Co. v. Stone, 89 Or. 360, 171 Pac 660; McDonald v. Supple, - Or. -, 100 Pac. 316.
Pennsylvania. Otis Elevator Co. v. Flanders Realty Co., 244 Pa. St. 186, 00 Atl. 624.
South Dakota. Avery Co. v. Peter-eon, - S. D. -, 171 N. W. 204.
Washington. Springfield Shingle Co. v. Edgecomb Mill Co., 62 Wash. 620, 35 L. R. A. (N.S.) 258, 101 Pac. 233.
West Virginia. Charleston Lumber Co. v. Friedman, 64 W. Va. 151, 61 S. E. 815.
"The main proposition, underlying the whole argument of the defense on the general merits, is, that these covenants to complete certain sections within a definite lime, and the covenant to pay, are mutual and dependent covenants; and that time is so far of the essence of this covenant of plaintiffs that they can recover nothing, because they completed nothing within the specified time.
"Where a specified thing is to be done by one party as the consideration of the thing to be done by the other, it is undeniably the general rule that the covenants are mutual, and are dependent, if they are to be performed at the same time; and if, by the terms or nature of the contract, one is first to be performed as the condition of the obligation of the other, that which is first to be performed must be done, or tendered, before that party can sustain a suit against the other.
"There is no doubt that, in this class of contracts, if a day is fixed for performance, the party, whose duty it is to perform or tender performance first must do it on that day, or show his readiness and willingness to do it, or he can not recover in an action at law for nonperformance by the other party.
"But, both at common law and in chancery, there are exceptions to this rule, growing out of the nature of the thing to be done and the conduct of the parties. The familiar case of part performance, possession, etc., in chancery, where time is not of the essence of the contract, or has been waived by the acquiescence of the party, is an example of the latter; and the case of contracts for building houses, railroads, or other lar;:e and expensive constructions, in which the means of the builder and his labor become combined and affixed to the soil, or mixed with materials and money of the owner, often afford examples at law.
"If A contract to deliver a horse to B on Monday next, for which B agrees to pay $100, A can not recover by an offer to deliver on Tuesday; but if A agree to deliver a horse, buggy and harness on Monday, and B accepts delivery of the horse and buggy, can he refuse to pay anything, though he accepts delivery of the harness on Tuesday? This is absurd. He waives, by this acceptance, the point of time as to the harness, at least so far as A's right to recover the agreed sum is concerned. If B have suffered any damage by the delay, he can recover it by an action on A's covenant to deliver on Monday; or, if he wait to be sued, he may recoup by setting it up in that action as a cross-demand growing out of the same contract.
"Such we understand to be especially the law applicable to building contracts.
"If the builder has done a large and valuable part of the work, but yet has failed to complete the whole or any specific part of the building or structure within the time limited by his covenant, the other party, when that time arrives, has the option of abandoning the contract for such failure, or of permitting the party in default to go on. If he abandons the contract and notifies the other party, the failing contractor can not recover on the covenant, because he can not make or prove the necessary allegation of performance on his own part. What remedy he may have in assumpsit for work and labor done, materials furnished, etc., we need not inquire here; but if the other party says to him, 'I prefer you should finish your work,' or should impliedly say so by standing by and permitting it to be done, then he so waives absolute performance as to consent to be liable on his covenant for the contract price of the work when completed.