WEEK12: Breach & Substantial Performance; Expectation Damages

Question 1

Substantial Performance

Answer 1

California Supreme Court defined substantial performance as follows:[T]here is substantial performance where the variance from the specifications of the contract does not impair the building or structure as a whole, and where after it is erected the building is actually used for the intended purpose, or where the defects can be remedied without great expenditure and without material damage to other parts of the structure, but  . . .  the defects must not run through the whole work, so that the object of the owner to have the work done in a particular way is not accomplished  . . .  nor be so substantial [that]  . . .  the allowance out of the contract price will not give the owner essentially what he contracted for.

Question 2

Expectation Damages

Answer 2

It has long been the policy, however, for the court in a breach-of-contract suit to attempt, if possible, to compute and award damages so as to give plaintiff her expectation of gain under the contract: the “benefit of the bargain” that plaintiff would have realized had the agreement been fully performed. See Restatement (Second) §347.