## Facts

- An owner contracted with a builder to construct 35 houses in Watertown, Massachusetts under a written agreement that apportioned a separate price to each house and tied payments to construction milestones for each unit.
- The agreement contemplated separate mortgage financing for each lot; construction of each house would begin when the builder received the mortgage proceeds for that lot.
- The builder completed 20 houses but refused to build the remaining 15 unless the owner paid substantially more than the contract price, stating it had lost money on the completed work.
- The owner was willing to perform his remaining contractual obligations for the unbuilt houses, but the builder would not proceed on the original terms.
- An auditor, whose factual findings were final, found: (i) no compensable defects in the 20 completed Watertown houses, (ii) the owner’s damages for the 15 unbuilt houses were $9,935 (the excess cost of having another builder complete them), and (iii) the owner still owed the builder $2,816.35 for work on the 20 completed houses.
- The trial court entered judgment awarding the owner $9,935 and denied the builder recovery on its cross-action for the unpaid $2,816.35; the builder appealed.

## Issues

1. Whether the builder’s refusal to construct the remaining 15 houses unless paid more than the contract price constituted an unjustified repudiation and present breach excusing the owner’s further performance and permitting immediate suit for damages.
2. What measure of damages applies to the owner when contracted construction is never performed due to the builder’s breach.
3. Whether the 35-house building contract was entire or divisible, and, if divisible, whether the builder’s breach as to the unbuilt houses barred recovery of unpaid amounts for the completed houses.

## Decision

- The court held the builder’s demand for substantially greater compensation and refusal to proceed under the contract terms constituted an unjustified repudiation and present breach.
- The owner was excused from further performance and entitled to damages for the unperformed portion measured by the excess cost of completion by others; the $9,935 finding was proper.
- The contract was divisible because each house was treated as a separate unit for construction, pricing, and payment.
- Because the contract was divisible, the builder’s breach as to the 15 unbuilt houses did not bar recovery of sums due for the 20 houses completed in substantial compliance; the builder could recover the unpaid $2,816.35.
- The trial court’s denial of the builder’s recovery for completed work was erroneous, although the owner’s recovery for the unbuilt houses was affirmed.

## Legal Principles

- A contractor’s refusal to continue performance unless paid more than the agreed contract price can constitute repudiation and a present breach, excusing the other party’s further performance.
- For construction work never performed due to the contractor’s breach, the owner’s damages are the difference between the contract price for that work and the higher cost of having it performed by others.
- A building contract is divisible where the agreement apportions a separate price to each unit and ties performance and payments to each unit as a distinct subject of exchange.
- In a divisible contract, a party’s breach as to some units does not automatically forfeit its right to payment for other units properly completed, subject to the other party’s damages for the breached portion.

## Conclusion

The court treated the 35-house agreement as a divisible contract: the builder’s repudiation entitled the owner to completion-cost damages for the 15 unbuilt houses, but it did not eliminate the builder’s right to recover the unpaid balance for the 20 houses that were completed in substantial compliance.


Carrig v. Gilbert-Varker Corp., 50 N.E.2d 59 (Mass. 1943)