Hoenig v Isaacs [1952]

Court: Court of Appeal

Facts: Mr. Hoenig agreed to decorate and furnish Mr. Isaacs' flat for £750. After completing the work, Hoenig faced issues with a bookcase and wardrobe, which required an additional £55 to rectify. Isaacs, however, refused to pay the remaining £350, arguing that Hoenig had not fully completed the contract due to these defects.

Issue: Does substantial performance of a contract entitle a party to payment, despite minor defects that require additional expenditure to rectify?

Held: The Court of Appeal upheld the decision of the Official Referee, finding that Hoenig had substantially performed the contract. Somervell LJ emphasized that substantial performance entitles the contractor to payment, with any defects constituting a claim for damages rather than a total failure of performance. Denning LJ added that not every breach of contract deprives the contractor of payment. The contractor is entitled to payment for the work done but can face deductions for defects, which are to be compensated based on the cost of rectification.

Key Judicial Statement: Denning LJ stated, "Substantial performance of a contract entitles the contractor to payment, with deductions for defects. Breaches that do not go to the root of the contract do not absolve the employer from their obligation to pay the agreed price."

💡Leveluplaw: This case reinforces the principle that substantial performance of a contract can warrant payment, even if there are minor defects. It illustrates that while a contractor may not receive the full agreed sum due to imperfections, they are still entitled to payment and can claim for any diminution in value resulting from defects. The case highlights the balance between performance and defects, and how breaches affecting only parts of the contract do not necessarily relieve the other party of their payment obligations.