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the Carbolic Smoke Ball Co in breach of the contract with Mrs Carlill or were they guilty only of a non-performance? 2 From the position of the law of remedies, the difference between breach and non-performance can be important. If a contractor wishes to claim damages, it must be established that the other party is in breach of contract and that this breach has caused the plaintiffs damage. But what if the damage suffered by the plaintiff as a result of the other party’s failure to perform is less than the price that the plaintiff had agreed to pay for the performance? Is a claim in damages on the basis of breach the best way, from the claimant’s point of view, of conceptualising the problem? (Cf Bolton v Mahadeva, p 226.) 3 What if a contractor performs most, but not all, of his obligations under a contract: can the other party refuse to pay any of the agreed price?
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Denning LJ:… In determining this issue the first question is whether, on the true construction of the contract, entire performance was a condition precedent to payment. It was a lump sum contract, but that does not mean that entire performance was a condition precedent to payment. When a contract provides for a specific sum to be paid on completion of specified work, the courts lean against a construction of the contract which would deprive the contractor of any payment at all simply because there are some defects or omissions. The promise to complete the work is, therefore, construed as a term of the contract, but not as a condition. It is not every breach of that term which absolves the employer from his promise to pay the price, but only a breach which goes to the root of the contract, such as an abandonment of the work when it is only half done. Unless the breach does go to the root of the matter, the employer cannot resist payment of the price. He must pay it and bring a cross-claim for the defects and omissions, or, alternatively, set them up in diminution of the price… It is, of course, always open to the parties by express words to make entire performance a condition precedent…

Even if entire performance was a condition precedent, nevertheless, the result would be the same, because I think the condition was waived… [The defendant] did not refuse to accept the work. On the contrary, he entered into possession of the flat and used the furniture as his own, including the defective items. That was a clear waiver of the condition precedent. Just as in a sale of goods the buyer who accepts the goods can no longer treat a breach of condition as giving a right to reject but only a right to damages, so also in

a contract for work and labour an employer who takes the benefit of the work can no longer treat entire performance as a condition precedent, but only as a term giving rise to damages…

Bolton v Mahadeva [1972] 1WLR 1009 Court of Appeal

(Seep 226.)

Attia v British Gas plc [1988] QB 304 Court of Appeal

Bingham LJ: The plaintiffs claim pleaded in this action is a simple one. She alleges that the defendants were installing central heating in her house and that a fire occurred as a result of the defendants’ negligent work. This the defendants admit. The plaintiff further pleads that she returned home to see smoke coming from the loft of the house and then witnessed the burning of the house for over four hours until the fire was brought under control. This experience, she alleges, caused her ‘nervous shock in the form of a serious psychological reaction evidenced by an anxiety state and depression’.