Carter v Sherburne
Vermont S. Ct.  [1974]
Author:- Sam Biers

Relevant Facts: Contractor brought action against owner to recover for labor and materials furnished under written construction contracts and for further amounts on quantum meruit basis for labor and materials furnished without express agreement as to price.  Df was a developer builder, Pl a contractor.  The parties executed four contracts between them.  The Ks called for weekly progress payments based upon work completed w/ a provision for retaining 10 % until ten days after final acceptance.  Df kept shifting Pl’s activities from 1 k to another and delaying payments to Pl.  Df’s representatives promised the Pl extensive additional Ks in return for certain work building a gondola lift line w/o compensation.  Df notified Pl in April that no more progress payments would be made on the gondola K. Pl continued work but did not finish.  The Ks were terminated in June.

Legal Issue(s): Whether time was of the essence of the contracts and contractor's failure to perform within time specified precluded recovery, and that where parties had entered into an express, although unformalized, contract for good consideration for work in addition to that covered by contracts, contractor could recover in quantum meruit for the additional work?Court’s Holding: No not of essence, and Contractor’s failure did not preclude recovery; Yes QM.

Procedure: Tr. Ct.  rendered judgment in favor of the contractor and the owner appealed. S. Ct Affirmed.

Law or Rule(s):  Where parties have not expressly declared their intention as to whether time is of the essence of a contract, determination as to whether time is of the essence depends on intention of parties, circumstances surrounding transaction and subject matter of the contract. Where time is of the essence of contract, performance on time is a constructive condition of the other party's duty, usually the duty to pay for the performance rendered. Generally time is not of the essence in a building or construction K in the absence of an express provision.

Court Rationale:   Time was not of the essence in any of these Ks.  None of the four Ks included express language making time of the essence, and there is nothing in the circumstance surrounding these Ks.  2 Ks called for completion dates and forfeitures for noncompliance but this does not make time of the essence.  Where time is not of the essence a failure to complete work on time w/i a specified time will not terminate a K, but will subject the contractor to damages for the delay.   Here the Dfs actions in shifting the Pls activities and withholding payment caused the delays.  Df informed Pl in April that no more progress payments would be made on the gondola K.  At that time Pl had completed a substantial portion of the work, but had not invoiced it yet. Dfs notice concerned only the progress payments, and was not a termination of the K.  Failure of payment does not require cessation of performance.  Termination w/o legal justification entitles the Pl to recover the K price for work done before termination, or the reasonable value of the performance rendered, QM.

Plaintiff’s Argument: The delays were a result of the Df, and the work was performed.

Defendant’s Argument: The Pl is not entitled to recover for work done after notice, and Pl was not in substantial compliance w/ the Ks.