Hoenig v Isaacs [1952] 2 All ER 176

Facts

• Mr. Hoenig contracted with Mr. Isaacs to redecorate a one-room flat for a lump sum of £750.
• On completion, Mr. Isaacs refused to pay the £350 balance, citing defects in the bookcase and wardrobe.
• The cost to remedy these defects was estimated at £55.
• Mr. Isaacs contended that because the work did not meet precise contractual specifications, no payment was due.
• The court was asked to decide whether Mr. Hoenig was entitled to any payment given the existence of these defects.

Issues

1. Whether complete and perfect performance was a condition precedent to Mr. Hoenig’s right to payment under the contract.
2. Whether substantial performance had been achieved, entitling Mr. Hoenig to the contract price minus deductions for defects.
3. To what extent minor breaches or defects affect payment obligations in lump sum contracts for work and labour.

Decision

• The Court of Appeal held that the contract did not require perfect, error-free completion before payment could be demanded.
• Mr. Hoenig was entitled to the contract price less the cost of remedying the defects.
• The court distinguished between a breach that amounted to total non-performance and minor defects, ruling that only the former could defeat a contractor's right to payment.
• The appeal by Mr. Isaacs was dismissed.

Legal Principles

• Substantial performance in a contract for work and labour entitles the party to payment, subject to deduction for any defects.
• Not all breaches necessitate complete withholding of payment; only those going to the root of the contract allow the other party to refuse payment outright.
• Conditions precedent must be fully satisfied to trigger obligations, but completion clauses in work contracts are usually construed as terms, not strict conditions.
• The substance of the contract, rather than minor deviations, determines entitlement to payment.
• Earlier case law, such as Cutter v Powell, was inapplicable to situations involving minor defects rather than fundamental non-performance.
• Quantum meruit, or payment for partial work, is not generally available unless substantial performance is achieved or a new contract may be inferred, as distinguished in Sumpter v Hedges.

Conclusion

Hoenig v Isaacs confirmed that substantial performance is sufficient for claiming payment under lump sum work contracts, subject to deductions for defects. Minor imperfections do not justify complete withholding of payment; only fundamental failures do. This decision represents a departure from stricter earlier interpretations and clarifies the distinction between conditions and terms within contract law.