Jacob & Youngs, Inc. v. Kent
Citation: Court of Appeals of New York, 230 N.Y. 239 (1921)
Facts
Jacob & Youngs built a country home for George Kent, whose contract specified that all plumbing pipe must be “Reading pipe” of a particular manufacturer. Near completion, it was discovered that the contractor had inadvertently installed pipe of a different brand, Cohoes, which was of the same quality and price as Reading pipe but not the specified brand. Replacing the pipe would have required tearing out finished walls at great expense. Kent refused to pay the remaining contract balance.
Issue
Whether a contractor who substantially but not perfectly performed a construction contract may recover the contract price, and if so, how damages for the deviation should be measured.
Holding
Judge Cardozo held that the contractor had substantially performed and was entitled to recover the contract price less any damages for the deviation. Because the pipe was of equal quality, damages were measured by the diminution in market value (essentially zero), not the cost of replacement.
Rule
Where a party has substantially performed a contract and the deviation is trivial and innocent (not willful), the breaching party may recover the contract price minus the diminution in value caused by the breach. Courts will not award cost-of-completion damages when the result would be economic waste grossly disproportionate to the benefit gained.
Significance
The canonical case on substantial performance and the economic waste doctrine in construction contracts. Introduces the distinction between conditions (strict compliance required) and promises (substantial performance may suffice), and the tension between cost-of-completion and diminution-in-value damages measures.