Is substantial performance good enough in construction?

On Behalf of Dunlap Fiore, LLC |

Just as with people, no construction project is perfect. After all, during some phase of building projects, something inevitably goes wrong. Still, if an owner pays for a specific type of build, should not he or she receive exactly that?

The doctrine of substantial performance often applies in construction disputes. If a property owner is seeking specific performance or other damages, a common law substantial performance theory may save the contractor from having to fix the build or pay considerable damages.

The purpose of substantial performance

Generally, parties to contracts should receive exactly what they bargain for. The doctrine of substantial performance changes that rule, though. If the contractor substantially performs the construction contract, the owner is only eligible for loss of value and not the cost of repair.

The purpose of this legal doctrine is to provide equitable relief when the cost of total performance far outweighs the benefit to the property owner.

The effect of substantial performance

Louisiana law protects construction professionals from overly picky property owners. If the contractor substantially completes the build, he or she typically has a legal entitlement to the full contract price minus the owner’s provable damages from the contractor’s material breach.

To proceed with a substantial performance claim, the contractor must prove the build is fit for use as the owner intended. After that, the burden shifts to the property owner to demonstrate a deficiency in the contractor’s work product, workmanship or materials.

The owner also must prove actual damages that go beyond simple differences. Thus, the effect of substantial performance is to provide fair compensation to the contractor without overly burdening the property owner.