Contractor’s Substantial Performance Of Home Repair Work Defeats Homeowners’ Breach of Contract Suit – IL 5th Dist.

Brown v. Daech & Bauer, 2015 IL App (5th) 140203-U, serves as a recent example of a court applying the substantial performance doctrine in favor of a contractor in a disgruntled homeowner’s breach of contract suit versus the contractor.

The homeowner plaintiffs sued the contractor for defective work on plaintiffs’ home after some hail damage.  The plaintiffs joined statutory claims for violation of the Home Remodeling and Repair Act (HRRA) and the Consumer Fraud Act (CFA) in their complaint.

For its part, the contractor counterclaimed for monies withheld by the plaintiff.  After a bench trial, the lower court sided with the contractor and awarded it damages.  It ruled against the plaintiffs on all claims.

 The 5th District affirmed and in doing so, gives some content to both the substantial performance and partial performance doctrine under Illinois contract law.

In Illinois, contractors aren’t required to perform with surgical precision.  Instead, contractors only need to exhibit the “honest and faithful performance of the material and substantial parts of the contract with no willful departure from or omission of the essential terms of the contract.” This is the substantial performance doctrine.

Like most legal tests, the substantial performance one is fluid and fact-based.  A contractor can meet the standard even where there are some defects, deviations or omissions from the contract.  So long as the project’s structural integrity remains intact and any contractual deviations can be fixed without damaging the property, the contractor can likely show substantial performance and recover under the contract.  The homeowner’s recourse when faced with a substantially (as opposed to perfectly) performing contractor is to take a credit against the contract price for any defects in the contractor’s work.

The appeals court agreed with the trial court’s finding that the plaintiff met the substantial performance standard. Since this finding wasn’t against the manifest weight of the evidence (“unreasonable, arbitrary, not based on the evidence”), the judgment for the contractor was upheld.

The court also found that the contractor could recover under the related doctrine of partial performance. This rule applies where a plaintiff performs most but not all of the material terms of a contract – where it consists of several component parts that can be neatly separated from each other. The key inquiry in deciding whether a contract is “entire” as opposed to “severable” (divisible, basically) is whether the parties gave a single assent to the whole transaction or whether they agreed separately to various parts of the contract.

Here, the court found that while the contractor didn’t finish about $1,000 worth of the $4,000-plus contract, it could still recover for the portions of the contract it did sufficiently perform.  The court found that certain aspects of the contract were different enough to allow piecemeal recovery.

Lastly, the court rejected the homeowners’ HRRA claim premised on the contractor’s failure to supply the required statutory brochure.  First, the court agreed with the contractor’s argument that it did in fact provide all HRRA disclosures.  Moreover, even if it didn’t furnish the forms, the plaintiff still failed to show any measurable damages caused by the HRRA breach.  At most, this was a technical violation that didn’t merit wholesale defeat of the plaintiff’s suit.

Take-aways:

A pretty straight-forward illustration of the substantial performance doctrine and what a homeowner and contractor must show to win on a breach of contract suit based on faulty construction. The case emphasizes that contractors aren’t held to a flawlessness standard but instead they only must perform the material parts of a contract in a workmanlike fashion.

This case also signals a court’s unwillingness to defeat a contractor claim where there is a technical violation of the HRRA.  Absent actual damages flowing from an HRRA misstep, a homeowner likely won’t win on this claim.

 

 

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PaulP

Litigation attorney at Fisher Kanaris, P.C. representing businesses and individuals in all types of commercial disputes.