No. The builder doesn't have to pay for the expensive fix because it would be a huge 'economic waste.' The court explained that the builder did a 'good enough' job to be considered to have 'substantially performed' the contract. When that happens, there are two ways to handle mistakes. For small things, the builder pays the 'cost to repair.' But for a huge, expensive mistake like the misplaced wall, forcing a $4,000 repair that requires wrecking part of the house is unreasonable, especially since the mistake didn't make the house worth any less money. In this situation, the damages are measured by the drop in the home's value, which was zero. So, even though the homeowners didn't get the exact room size they wanted, they weren't financially harmed, so they don't get any money for the wall.

I agree that the builder did a good enough job to get paid, even though there were some mistakes. When you hire someone to build a house, it doesn't have to be perfect, as long as the important parts are done right and you can still live in it.

In this case, there were some problems, like a wall in the wrong place, but the people are still able to use the house. Experts even said the wrong wall doesn't change how much the house is worth.

For the wall in the wrong spot, the builder shouldn't have to pay the full cost to fix it, because that would be a waste of money. But for the other mistakes that are easier to fix, the builder should pay what it costs to make them right.

So, the builder should get the money that was agreed on, but with some taken away for the wall and the other mistakes. This is fair and doesn't waste anyone's money.

<?xml version="1.0" encoding="utf-8"?> <opinion type="majority"> <author id="b598-4"> Hallows, J. </author> The defendants argue that the plaintiff cannot recover any amount because he has failed to substantially perform the contract. The plaintiff conceded he failed to furnish the kitchen cabinets, gutters and downspouts, sidewalk, closet clothes poles, and entrance' seat amounting to $1,601.95. This amount was allowed to the defendants. The defendants claim some 20 other items of incomplete or faulty performance by the plaintiff and no substantial performance because the cost of completing the house in strict compliance with the plans and specifications would amount to 25 or 30 per cent of the contract price. The defendants especially stress the misplacing of the wall between the living room and the kitchen, which narrowed the living room in excess of one foot. The cost of tearing down this wall and rebuilding it would be approximately $4,000. The record is not clear why and when this wall was misplaced, but the wall is completely built and the house decorated and the defendants are living therein. Real-estate experts testified that the smaller width of the living room would not affect the market price of the house. The defendants rely on Manitowoc Steam Boiler Works v. Manitowoc Glue Co. (1903), 120 Wis. 1, 97 N. W. 515, for the proposition that there can be no recovery on the contract as distinguished from quantum meruit unless there is substantial performance. This is undoubtedly the correct rule at common law. For recovery on quantum meruit, see Valentine v. Patrick Warren Construction Co. (1953), 263 Wis. 143, 56 N. W. (2d) 860. The question here is whether there has been substantial performance. The test of what amounts to substantial performance seems to be whether the performance meets the essential purpose of the contract. In the Manitowoc Case the contract called for a boiler having *571 a capacity of 150 per cent of the existing boiler. The court held there was no substantial performance because the boiler furnished had a capacity of only 82 per cent of the old boiler and only approximately one half of the boiler capacity contemplated by the contract. In Houlahan v. Clark (1901), 110 Wis. 43, 85 N. W. 676, the contract provided that the plaintiff was to drive pilings in the lake and place a boathouse thereon parallel and in line with a neighbor’s dock. This was not done and the contractor so positioned the boathouse that it was practically useless to the owner. Manthey v. Stock (1907), 133 Wis. 107, 113 N. W. 443, involved a contract to paint a house and to do a good job, including the removal of the old paint where necessary. The plaintiff did not remove the old paint, and blistering and roughness of the new paint resulted. The court held that the plaintiff failed to show substantial performance. The defendants also cite Manning v. School Dist. (1905), 124 Wis. 84, 102 N. W. 356. However, this case involved a contract to install a heating and ventilating plant in the school building which would meet certain tests which the heating apparatus failed to do. The heating plant was practically a total failure to accomplish the purposes of the contract. See also Nees v. Weaver (1936), 222 Wis. 492, 269 N. W. 266 (roof on a garage). Substantial performance as applied to construction of a house does not mean that every detail must be in strict compliance with the specifications and the plans. Something less than perfection is the test of specific performance unless all details are made the essence of the contract. This was not done here. There may be situations in which features or details of construction of special or of great personal importance, if not performed, would prevent a finding of substantial performance of the contract. In this case the plan was a stock floor plan. No detailed construction of the house was shown on the plan. There were no blueprints. *572 The specifications were standard printed forms with some modifications and additions written in by the parties. Many of the problems that arose during the construction had to be solved on the basis of practical experience. No mathematical rule relating to the percentage of the price, of cost of completion, or of completeness can be laid down to determine substantial performance of a building contract. Although the defendants received a house with which they are dissatisfied in many respects, the trial court was not in error in finding the contract was substantially performed. The next question is, What is the amount of recovery when the plaintiff has substantially, but incompletely, performed? For substantial performance, the plaintiff should recover the contract price less the damages caused the defendant by the incomplete performance. Both parties agree Venzke v. Magdanz (1943), 243 Wis. 155, 9 N. W. (2d) 604, states the correct rule for damages due to faulty construction amounting to such incomplete performance, which is the difference between the value of the house as it stands with faulty and incomplete construction and the value of the house if it had been constructed in strict accordance with the plans and specifications. This is the diminished-value rule. The cost of replacement or repair is not the measure of such damage, but is an element to take into consideration in arriving at value under some circumstances. The cost of replacement or the cost to make whole the omissions may equal or be less than the difference in value in some cases and, likewise, the cost to rectify a defect may greatly exceed the added value to the structure as corrected. The defendants argue that under the Venzke rule their damages are $10,000. The plaintiff on review argues that the defendants’ damages are only $650. Both parties agree the trial court applied the wrong rule to the facts. The trial court applied the cost-of-repair or replacement rule as to several items, relying on Stern v. Schlafer (1943), *573 244 Wis. 183, 11 N. W. (2d) 640, 12 N. W. (2d) 678, wherein it was stated that when there are a number of small items of defect or omission which can be remedied without the reconstruction of a substantial part of the building or a great sacrifice of work or material already wrought in the building, the reasonable cost of correcting the defect should be allowed. However, in Mohs v. Quarton (1950), 257 Wis. 544, 44 N. W. (2d) 580, the court held when the separation of defects would lead to confusion, the rule of diminished value could apply to all defects. In this case no such confusion arises in separating the defects. The trial court disallowed certain claimed defects because they were not proven. This finding was not against the great weight and clear preponderance of the evidence and will not be disturbed on appeal. Of the remaining defects claimed by the defendants, the court allowed the cost of replacement or repair except as to the misplacement of the living-room wall. Whether a defect should fall under the cost-of-replacement rule or be considered under the diminished-value rule depends upon the nature and magnitude of the defect. This court has not allowed items of such magnitude under the cost-of-repair rule as the trial court did. Viewing the construction of the house as a whole and its cost we cannot say, however, that the trial court was in error in allowing the cost of repairing the plaster cracks in the ceilings, the cost of mud jacking, and repairing the patio floor, and the cost of reconstructing the nonweight-bearing and nonstructural patio wall. Such reconstruction did not involve an unreasonable economic waste. The item of misplacing the living-room wall under the facts of this case was clearly under the diminished-value rule. There is no evidence that defendants requested or demanded the replacement of the wall in the place called for by the specifications during the course of construction. To tear down the wall now and rebuild it in its proper place *574 would involve a substantial destruction of the work, if not all of it, which was put into the wall and would cause additional .damage to other parts of the house and require replastering and redecorating the walls and ceilings of at least two rooms. Such economic waste is unreasonable and unjustified. The rule of diminished value contemplates the wall is not going to be moved. Expert witnesses for both parties, testifying as to the value of the house, agreed that the misplacement of the wall had no effect on the market price. The trial court properly found that the defendants suffered no legal damage, although the defendants’ particular desire for specified room size was not satisfied. For a discussion of these rules of damages for defective or unfinished construction and their application, see Restatement, 1 Contracts, pp. 572, 573, sec. 346 (l)(a), and illustrations. On review, the plaintiff raises two questions: Whether he should have been allowed compensation for the disallowed extras, and whether the cost of reconstructing the patio wall was proper. The trial court was not in error in disallowing the claimed extras. None of them was agreed to in writing as provided by the contract, and the evidence is conflicting whether some were in fact extras or that the defendants waived the applicable requirements of the contract. The plaintiff had the burden of proof on these items. The second question raised by the plaintiff has already been disposed of in considering the cost-of-replacement rule. It would unduly prolong this opinion to detail and discuss all the disputed items of defects of workmanship or omissions. We have reviewed the entire record and considered the points of law raised and believe the findings are supported by the great weight and clear preponderance of the evidence and the law properly applied to the facts. By the Court. — Judgment affirmed. </opinion>

"No mathematical rule relating to the percentage of the price, of cost of completion, or of completeness can be laid down to determine substantial performance of a building contract."

Under ordinary contract law, only a material breach has the effect of discharging the other party's obligation to perform.

Whether a defect should fall under the diminished value rule or cost of repair rule depends upon the nature and magnitude of the defect.

—the impression that the wall is not worth moving and the fact that the Jacobs chose not to move the wall combine to raise a strong inference that allowing the Jacobs to retain the unpaid contract price or to recover the cost of moving the wall would give them a windfall at the builder' s expense.

—the owners of a new house to be constructed by a builder unsuccessfully claimed material breach (the absence of substantial performance), and therefore discharge of their executory payment obligations under the contract, on the basis of a number of shortcomings in the builder's work.

The test for substantial performance is whether the performance meets the essential purpose of the contract.

However, courts can use these doctrines to excuse promised performance when they decide that the matter bargained for is unimportant except to the extent that it affects the market price.

Cardozo's decision might be interpreted as enhancing efficiency because the (objective) value to the homeowner of the right to complete (specific) performance (installing Reading pipe in place of the substitute) is less than the (objective) costs that would be incurred by the contractor

—finding unreasonable economic waste in awarding approximately $4,000 to remove and replace a misplaced wall in a residence where the market value of the home was not affected by the defect

The court reasoned that to tear down the wall as built and build a new wall would result in economic waste because it would involve a substantial destruction of the work that was put into the wall, and would also result in damage to other parts of the home

No. When a contractor has substantially performed, the measure of damages for a defect is the diminution in value if the cost of repair would constitute unreasonable economic waste. The court first affirmed the trial court's finding of substantial performance, reasoning that this standard does not require strict compliance with every detail but rather that the performance meets the essential purpose of the contract. The court then addressed the measure of damages, distinguishing between two rules. For minor defects that can be remedied without significant destruction (like plaster cracks), the proper measure is the cost of repair. However, for a major defect like the misplaced wall, where repair would cost $4,000 and involve substantial destruction of completed work, the court must apply the diminished-value rule to avoid unreasonable economic waste. Since expert testimony established that the misplaced wall did not decrease the house's market value, the diminution in value was zero, and the defendants suffered no legal damage for this specific defect, despite their personal preferences not being satisfied.

Yes, the plaintiff substantially performed the contract and is entitled to the contract price less damages for the incomplete performance. Substantial performance does not require perfection or strict compliance with every detail of the contract, unless those details are made essential to the agreement. The test for substantial performance is whether the performance meets the essential purpose of the contract, not a strict mathematical calculation. 

In this case, while there were defects and omissions in the plaintiff's work, including a significantly misplaced wall, these issues did not prevent the house from being used for its intended purpose. The defendants are living in the house, and expert testimony indicated that the misplaced wall did not affect the market value. 

Regarding the appropriate measure of damages, I believe the diminished value rule should be applied to the misplaced wall, as rebuilding it would result in unreasonable economic waste. For the other defects, where repairs can be made without substantial destruction of the work, the cost of repair is an appropriate measure of damages.

Therefore, the plaintiff should recover the contract price, less the diminished value caused by the misplaced wall and the cost to remedy the other defects. This result avoids economic waste, prevents a windfall to either party, and aligns with the principles of substantial performance.

Plante v. Jacobs

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