February 6, 2013 Leave a comment
Bolton v. Mahadeva
 2 All ER 1322
(Substantial Performance of an obligation)
Defendant engaged plaintiff to install central heating system under a lump sum contract. However, the work was completed with many defects like: fumes from the boilers, inadequacy of warmth, etc. such that the total cost of repairing would have to be approximately 30% of the contract price. In these conditions defendant refused to pay the plaintiff any consideration for the work done and plaintiff sued for recovering the amount due for substantial performance.
ISSUE: Whether there was substantial performance of the obligations there under so as to enable plaintiff to recover anything on the contract?
The rule in Cutter v. Powell that unless the contracting party had performed whole of his contract, he wasn’t entitled to recover anything under a lump-sum contract needs to be seen in light of the rule in H Dakin v. Lee and William v. Roffey Bros which recognize the right of party to recover upon any substantial performance of his obligations rendered, even under lump-sum contracts, unless a provision express in the contract or implied from the circumstances suggests that parties intended the payment to be made only after the precise and complete performance by it.
However, while considering whether there has been a substantial performance, both nature of defects and proportion between the cost of rectifying them and the contract price needs to be taken into account. It would be nevertheless wrong to say that the contractor is only entitled to payment if the defects are so trivial as to be covered by de minimis rule; such that the rule of substantial performance has been extended farther till the cases where such a proportion reached ~10%
In present case, there was neither an express term nor any implied term pleaded to make it obligatory upon defendant to pay for the work only after it has been done ‘precisely’ and ‘completely’ such that any claim for substantial performance was not rejected on sole grounds of the agreement being a ‘lump-sum’ contract.
But, the contract was to install a central heating system such that the heating system neither did produce adequate heat nor was usable for it emitted fumes that made the air uncomfortable; the costs to repair the defects was huge in proportion to the contract price. Under these circumstances, the performance whatsoever couldn’t be regarded as substantial enough so as to enable plaintiff to recover anything upon it.
Author: Vishrut Kansal (National University of Juridical Sciences, Kolkata)