## Facts

- A contractor performed road and related construction work for a ski-area developer near Sherburne Mountain under four written construction contracts.
- The written contracts covered gravel placement, drilling and blasting, road construction, and cutting/grubbing for a gondola lift line.
- The contracts provided for weekly progress payments and a 10% retainage withheld until shortly after final acceptance.
- The contractor billed $52,571.25; the developer paid $41,368.05 and withheld the balance as retainage and claimed “adjustments.”
- The developer asserted the contractor’s work was defective and incomplete, treated delays as contractual noncompliance, withheld payment, and terminated the contractor’s work.
- The contractor also performed additional work outside the four written contracts without an agreed price, claiming it was induced by the developer’s promises of additional work that did not occur.
- The developer counterclaimed for extra expenses allegedly caused by the contractor’s failures.
- After a bench trial, the trial court found substantial compliance by the contractor, ruled the developer lacked a right to terminate, rejected the counterclaim, awarded the unpaid retainage and improperly taken adjustments, and allowed additional compensation in quantum meruit.
- The developer appealed, challenging substantial performance, the effect of time requirements, the payment awards, and quantum meruit recovery.

## Issues

1. Whether time was of the essence in the parties’ construction contracts so that alleged delay justified withholding payment and termination.
2. Whether the contractor’s performance constituted substantial performance entitling him to retainage and other withheld sums despite alleged defects or delays.
3. Whether the contractor could recover in quantum meruit for additional work performed without an agreed price based on the developer’s unfulfilled assurances of further work.
4. Whether the developer proved a valid counterclaim for costs allegedly caused by the contractor’s incomplete or delayed performance.

## Decision

- The Vermont Supreme Court affirmed the judgment for the contractor.
- The court upheld findings that the contractor substantially complied with the written contracts and that the developer had no contractual right to terminate on the grounds asserted.
- The court affirmed an award of the full retainage and the portion of claimed “adjustments” found to have been improperly withheld.
- The court affirmed quantum meruit recovery for extra work performed outside the written contracts where compensation was reasonably expected and the developer accepted the benefit.
- The court affirmed rejection of the developer’s counterclaim as unsupported.

## Legal Principles

- In construction contracts, time is not treated as of the essence absent clear contractual language or circumstances showing strict timing was a fundamental condition.
- Completion dates and contractual provisions imposing financial consequences for late performance are generally construed as remedial (damages-related) rather than forfeiture conditions authorizing nonpayment or termination.
- A party that causes or materially contributes to delay may not rely on that delay to justify termination or to withhold amounts otherwise due.
- Substantial performance permits recovery of the contract price subject to deductions for proven damages; minor deficiencies do not justify forfeiture of payment.
- Quantum meruit allows recovery of the reasonable value of services rendered and accepted where no price term governs and the circumstances indicate an expectation of compensation.

## Conclusion

The court affirmed a contractor’s recovery for work under written construction contracts and for extra work in quantum meruit, holding that time was not of the essence without clear contractual language, that owner-caused delay could not support termination or withholding, and that substantial performance and accepted extra services required payment.


Carter v. Sherburne Corp., 315 A.2d 870 (Vt. 1974)