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Construction Contract - Summary Of The Law

A good summary of the law regarding contract construction appears in Demetree v. Commonwealth Trust Co., Del. Ch. C.A. No. 14354, Allen, Ch. (August 27, 1996) at pp. 7-9:

The primary goal of contract interpretation is to satisfy the reasonable expectations of the parties at the time they entered into the contract. This process often requires courts to engage in an analysis of the intent or shared understanding of the parties at that time.

Under the plain meaning rule of contract construction, if a contract is clear on its face, the Court should rely solely on the clear, literal meaning of the words.

Where parties have entered into an unambiguous integrated written contract, the contract's construction should be that which would be understood by an objective reasonable third party.

An inquiry into the subjective unexpressed intent or understanding of the individual parties is neither necessary nor appropriate where the words of the contract are sufficiently clear to prevent reasonable persons from disagreeing as to their meaning.

In cases where the language of a contract is clear and unambiguous, this Court may not consider parol evidence to interpret the intent of the parties.

Of course, if there is uncertainty concerning the meaning of contractual language, the Court should consider the context and circumstances in which the words were used in order to determine the intended meaning. See, R.E. Harsht & Associates v. W.B. Verables & Sons, Inc., Del. Super., 1996 W.L. 65896 Lee, J. (1996).

Although a builder may not have satisfactorily performed a construction contract in every particular, the American courts are united in holding that a substantial performance of a building or construction contract will support a recovery . . .' 13 Am. Jur. 2d 44, Building and Construction Contracts, Sec. 41. That Delaware likewise follows this rule is indicated by the language in headnote 8 of Hawthorne v. Murray, 26 Del. 349, 3 Boyce 349, 84 A. 5, 6 (Del. Super., 1912).

It is established Delaware law that in order to recover damages for a breach of contract, the plaintiff must demonstrate substantial compliance with all of the provisions of the contract. McCloskey v. Maciey, Del. Super., No. 83L-AP-32, Ridgely, J. (November 29, 1984), at 3; Emmett S. Hickman Co. v. Emilio Capaldi Developer, Inc., Del. Super., 251 A.2d 571, 573 (1969).

If the plaintiff has committed a material breach he cannot complain if the non-breaching party subsequently refuses to perform. Hudson v. D & V Mason Contractors, Inc., Del. Super., 252 A.2d 166, 170 (1969).

The converse of this principal is that a slight breach by one party, while giving rise to an action for damages, will not necessarily terminate the obligations of the injured party to perform under the contract. 11 Williston on Contracts, § 1292, at 8 (3d ed. 1968). Non-performance by the injured party under such circumstances will operate as a breach of contract.

The question whether the breach is of sufficient importance to justify non-performance by the non-breaching party is one of degree and is determined by weighing the consequences in the light of the actual custom of men in the performance of contracts similar to the one that is involved in the specific case.' 4 Corbin on Contracts, § 946, at 809 (1967). See also 11 Williston on Contracts § 1292, at 8-11 (1968).

Materiality of the breach is the subject of the Restatement (Second) of Contracts § 241, which provides:

In determining whether a failure to render or to offer performance is material, the following circumstances are significant:

(a) the extent to which the injured party will be deprived of the benefit which he reasonably expected;

(b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived;

(c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture;

(d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances;

(e) the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing. See, Eastern Electric and Heating, Inc. v. Pike Creek Professional Ctr., Del. Super., 1987 WL 9610, O'Hara, J. (1987).

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