## Facts

- A contractor-builder agreed to sell a residence in Holladay, Utah, to the purchasers for $36,000 while the house was nearing completion.
- The written contract placed $3,000 in escrow to be held until “satisfactory completion of the work,” referring to a specified list of items attached to the contract.
- The purchasers moved into the house while the builder continued working on the listed items.
- After the builder asserted the listed work was complete and requested release of the escrow funds, the purchasers refused, claiming dissatisfaction with certain items.
- The builder agreed to complete additional items on a second list requested by the purchasers.
- When the builder attempted to perform the second-list work, the purchasers demanded further work beyond prior lists and, upon the builder’s refusal, ordered him off the property and continued to withhold authorization to release the escrow funds.
- The trial court entered judgment for the builder-sellers in the amount of $2,739, representing sums found payable under the contract.
- The purchasers appealed, arguing the escrow could not be released absent their subjective satisfaction.

## Issues

1. Whether the contractual phrase “satisfactory completion of the work” in a house construction/sale contract permits the purchasers to withhold payment based solely on their subjective dissatisfaction.
2. Whether, instead, “satisfactory completion” requires performance meeting an objective reasonable-person standard, constrained by good faith.
3. Whether the evidence supported the trial court’s determination that the builder’s performance satisfied the contractual standard.

## Decision

- The Utah Supreme Court affirmed the judgment for the builder-sellers.
- The court construed “satisfactory completion of the work” as requiring completion satisfactory to a reasonable person under the circumstances, not an unrestricted purchaser veto.
- The court treated the contract as one involving objectively measurable performance (workmanship and conformity to specified items), not personal taste or fancy.
- The court declined to disturb the trial court’s findings because there was evidence reasonably supporting the conclusion that the work met ordinary standards and the purchasers’ continued demands were unreasonable.

## Legal Principles

- “Satisfaction” clauses fall into two categories: (1) personal taste/fancy clauses applying a subjective standard, and (2) utility/fitness/workmanship clauses applying an objective reasonable-person standard.
- In construction-type agreements where performance is objectively ascertainable, “satisfactory” performance is judged by reasonableness, not by a party’s arbitrary preference.
- A party asserting dissatisfaction under a satisfaction clause must act in good faith and may not use the clause to demand performance beyond the contract or to avoid payment after adequate performance.
- Appellate courts generally defer to trial-court factual findings on performance and reasonableness when supported by evidence.

## Conclusion

The court held that “satisfactory completion” in a residential construction/sale contract required objectively reasonable completion in good faith, and it affirmed the award because the builder’s work met that standard and the purchasers could not withhold escrow funds based on shifting, unreasonable demands.


Haymore v. Levinson, 328 P.2d 307 (Utah 1958)