Warner v. McLay
Citation: 92 Conn. 416 (1918)
Facts
McLay contracted to build a house for Warner. McLay abandoned the contract before completion. Warner hired another contractor to complete the work at a higher cost. Warner sued for expectation damages — the cost to complete minus the contract price remaining.
Issue
How are expectation damages measured when a contractor abandons a construction contract mid-performance?
Holding
The owner is entitled to the cost of completion (what it costs to finish the work with a substitute contractor) minus any unpaid portion of the contract price. This puts the owner in the position they would have been in had the contract been performed.
Rule
Expectation damages — cost to complete: Where a contractor breaches a construction contract, the non-breaching party’s damages are: (cost to complete with substitute) − (contract price remaining unpaid). This compensates the owner for the benefit of the bargain without a windfall.
Significance
- Standard measure for owner’s damages in incomplete construction contracts
- Contrasted with the completed-but-defective construction scenario, where the measure may be diminution in value rather than cost of repair (Jacob & Youngs v. Kent)
- Illustrates the expectation interest: put the plaintiff where they would have been had the contract been performed