Lecture on Substantial Performance in American Contract Law

Overview

• Comparison between perfect tender and substantial performance standards in contract performance.
• Focus on the dominance of the substantial performance test in American contract law.

Key Case: Jacob & Youngs v. Kent (1921)

• Parties: Construction of a residence by Mr. George Edward Kent.
• Contract Specification: Required use of Redding brand pipe.
• Actual Installation: Cohoes brand pipe was used.
• Legal Issue: Whether the homeowner could withhold remaining payment due to this deviation.

Judge Cardozo's Opinion

• Intent: The omission of Redding pipe was not fraudulent or willful, rather an oversight.
• Comparison: Redding and Cohoes pipes were identical visually, distinguished only by manufacturer marking.
• Finding: The defect was deemed insignificant in relation to the overall project.

Legal Principles

• Substantial Performance: Minor, innocent omissions can be atoned by allowance of resulting damages, avoiding forfeiture.
• Material Breach: Breach that is significant enough to release the other party from obligations.
• Promises and Conditions: Some promises in a contract are not conditions that free obligations if breached.
• Justice and Intention: Evaluating whether promises are important or trivial based on justice and presumed intention.

Outcome of Jacob & Youngs v. Kent

• Not a material breach, as Cohoes pipe met the quality standards expected.
• Emphasized practical adaptation over rigid logic in legal doctrine.

Comparative Case: O.W. Grun Roofing v. Cope (Texas, 1975)

• Contractor Obligation: Install roof with russet glow (uniform color) shingles.
• Issue: Installed shingles did not match in color, affecting visual appearance.

Court's Analysis

• Good Faith: Contractor must intend to comply with the contract.
• Defects: Must not be pervasive or deviate from general plan.
• Purpose: Deviation shouldn't prevent achieving the contract's purpose.
• Visual Role: Roofing has a visual component unlike pipe installation.

Outcome

• Contractor failed to achieve substantial performance due to visual mismatch of shingles.
• Contractor liable for damages, as substantial performance was not achieved.

Consistency Between Cases

• Different facts lead to different results; substantial performance is fact-dependent.
• Jacob & Youngs: Structural quality was met, visual role not significant.
• Grun Roofing: Visual role was crucial, substantial performance not met.

Conclusion

• Substantial performance doctrine is nuanced and requires evaluating the importance of contractual promises and their role.
• Next lesson will cover the perfect tender rule and its relevance in sale of goods contracts under the Uniform Commercial Code (UCC).