## Facts

- General Motors (GM) hired Baystone Construction, Inc. to build an addition to a Chevrolet plant in Muncie, Indiana.
- Baystone subcontracted with Morin Building Products Company, Inc. to supply and erect aluminum exterior wall siding for the addition.
- The subcontract required aluminum siding of a specified type and gauge with a mill finish and stucco-embossed texture matching existing siding.
- The subcontract contained clauses providing that work was subject to the owner’s final approval, that decisions on “artistic effect” would be final if within the contract documents, and that disputes over quality or fitness would be decided by the owner, requiring “first class” work.
- After installation, the siding appeared nonuniform when viewed in bright sunlight from an acute angle, and GM’s representative rejected it.
- Baystone removed Morin’s siding, hired another subcontractor to replace it, and GM approved the replacement.
- Baystone withheld the remaining subcontract balance (about $23,000); Morin sued for the unpaid amount and obtained a jury verdict in its favor.

## Issues

1. Whether a satisfaction/approval clause in a commercial construction contract should be applied under a subjective “actual satisfaction” standard or an objective “reasonable person” standard.
2. Whether the district court correctly instructed the jury to apply an objective reasonableness standard to GM’s rejection of the siding.

## Decision

- The Seventh Circuit affirmed the judgment for Morin.
- The court held that, in this commercial building context, the satisfaction clause is governed by objective criteria: the question is whether a reasonable owner should have been satisfied.
- The challenged jury instruction correctly stated the governing standard for satisfaction clauses in commercial construction.
- Under the objective standard, the jury could find GM’s rejection unreasonable despite the contract’s approval language.

## Legal Principles

- Satisfaction clauses are interpreted differently depending on the contract’s subject matter:
  - Subjective satisfaction applies when performance is primarily a matter of personal taste or aesthetics.
  - Objective satisfaction applies when performance concerns commercial quality, operative fitness, or mechanical utility.
- In commercial construction contracts, even broad “final approval” language generally does not grant an owner unfettered discretion to reject conforming work; acceptability turns on objective reasonableness.
- Standard-form references to “artistic effect” do not convert an industrial construction contract into a personal-taste arrangement absent clear indications that aesthetics were the bargained-for criterion.

## Conclusion

The court upheld a verdict for the subcontractor, ruling that an owner’s rejection under a satisfaction clause in a factory construction project must be evaluated by an objective reasonable-person standard, allowing recovery where the owner’s dissatisfaction was unreasonable in light of the contract specifications and commercial expectations.


Morin Bldg. Prods. Co. v. Baystone Constr., Inc., 717 F.2d 413 (7th Cir. 1983)