ABSTRACT
Lump sum contracts are those where the contract provides for payment of a specific sum upon the completion of specific work. In some cases, it appears to have been taken as a general rule that lump sum contracts are intended by the parties to be entire.18 The doctrine of substantial performance has been used in some cases to avoid the injustice which arises from the inflexible application of this rule. In Hoenig v Isaacs,19 Lord Denning said that the courts lean against an interpretation of lump sum contracts which would deprive a contractor of any payment at all, simply because there are some minor defects or omissions. This seems to suggest that, in Lord Denning’s view, there is a presumption in an ordinary lump sum contract that the parties intended substantial performance to entitle the contractor to payment. Provided the cost of remedying the defect is trivial compared to the contract price, this would appear to be the fairer approach, as the innocent party will be entitled to damages in relation to the deficiencies. If performance falls short of substantial completion, no payment can be claimed.20
