Contractor V. Newfield Problem Solution

Contractor v. Newfield Problem Solution

Facts: Weldon Newfield contracted to have a custom home built. As a part of the $270,000 contract, Weldon had a list specifying the materials that were to be used in the construction. While Newfield was in Europe the contractor was unable to find "Reading Copper Pipe," one of the items specified in the contract. Unable to reach Newfield, and with limited time remaining to complete the project, the contractor decided to use another brand of copper pipe. After returning from his trip, Newfield learned of the problem and refused to pay the remaining $235,000 due on the contract.

Issue: Can Newfield refuse to pay the remainder of the contract? Did the contractor fail to perform on the contract?

Rule: If a contractual duty has not been discharged or excused, the contracting party owes an absolute duty to perform. There are 3 types of performance of a contract:

Complete Performance- The contract is discharged by the complete and strict performance of the contracting parties, with each meeting the agreed upon conditions set forth in the contract.

Substantial Performance (Minor Breach)- Occurs when the contract is discharged with only a slight deviation from the agreed upon terms.

Inferior Performance (Material Breach) - occurs when a party to a contract renders an inferior performance of their contractual obligation which impairs or destroys the essence of the contract.

Application: The contractor failed to use the appropriate materials as outlined in the contract. Therefore there was no complete performance of the contract. Newfield may argue that piping cannot be replaced without tearing down the entire structure, including its foundation, constituting a material breach of contract. Newfield will have to prove that the materials used were of inferior quality and compromised the essence of the contract i.e. made the home unlivable. Assuming Newfield is unable to do this, the contractor may argue that even though they did not use the specified copper piping, all other specified materials and conditions set forth in the contract were met, showing there was substantial performance of the contract with only a slight deviation.

Conclusion: The court would enforce the contract and award the contractor the remainder of the contract minus any costs Newfield would reasonably incur to replace the copper piping and the difference in the costs of materials. If Newfield were able to prove that the home was made unlivable with the contractor's use of "inferior" piping, Newfield would be able to rescind the contract and would also be able to seek compensatory damages resulting from the demolition of the now defunct structure and costs of rebuilding the home, but also any consequential damages such as personal losses incurred by Newfield i.e. renting a house or