Cases: Substantial Performance

A contractor who deliberately used cheaper rock in creating a driveway and put it in the wrong place was nevertheless entitled to recover under the doctrine of substantial performance, according to a recent decision by the North Carolina Court of Appeals.

In the case, two parties, Reaves and Hayes, agreed to a consent order under which, among other things, Hayes’s property would get a right-of-way across Reaves’s.  Hayes agreed to pay for a driveway across the property, and the agreement provided that if Hayes did not do so, Reaves would, and charge Hayes for the costs.  Reaves subsequently built the driveway, but did not put it exactly where the agreement specified.  The agreement also had specified a “6 inch crush and run” driveway, but Reaves deliberately used a cheaper sandrock and washed stone method.  When Hayes refused to pay, Reaves sued.

A consent order, said the court, is simply a contract entered on the books of a court, and must be interpreted like any other contract.  The fact that Reaves did not comply precisely with the contract did not excuse Hayes.  Under the doctrine of substantial performance, Reaves may still be able to recover if the type of road material and the location of the road were “dependent covenants” that did not go to the heart of the deal.   Here, the road was plainly usable, even if not exactly where it was supposed to be, and even if not made from the right stone.  Both of those requirements, said the court, were dependent covenants.  Since Hayes got a usable driveway, he was not excused from the requirement to pay.

Reaves v. Hayes, 2005 N.C. App. LEXIS 2401 (Nov. 1, 2005).

[Frank Snyder]