The construction process, especially on large or complicated projects, involves the efforts of many people over an extended period of time. While the goal of every reputable contractor or subcontractor is to deliver a high quality product, sooner or later a customer will be unhappy with the quality of the work on a particular project. On occasion, this may lead to refusal by the owner to pay the contractor, claiming that the work does not meet the terms of the contract.

The general rule of law is that strict performance of the duties of a contract is a condition precedent (must occur prior) to recovery on the contract. If that rule were applied to construction, it would mean that owners could refuse to pay for work that did not meet minor quality standards of the contract. For reasons of fairness, building contracts are an exception to the general rule.

In construction there is the substantial performance doctrine, which says that if the performance nearly equals what was bargained for by the parties, then payment must be made. If the owner can occupy or utilize the work for the use for which it was intended, then the work will be deem substantially complete and the owner is obligated to make payment. However, it should be remembered that an owner is permitted to make a reasonable deduction for the cost of achieving full performance.

A recent case illustrates this legal principle. [Kenmark Constr., Inc. v. Cronin, 2000 WL 783404 (Fla. 2d DCA 2000)] Here, the contractor sued the owner to foreclose a construction lien and was awarded slightly more than $10,000. However, the court "doubted whether Kenmark had built the house in a proper and workmanlike manner" indicating that the "workmanship was sloppy." Therefore, the court awarded a setoff to the owner of about $2,000. Notice that the deficiencies in the quality of the work did not defeat the bulk of the recovery. In this case the court found that the contractor had "substantially completed" the work and was entitled to payment of the balance of the contract less a deduction for the cost of obtaining full completion.

This case also illustrates a more technical legal principle. The lien law provides that the "prevailing party" is entitled to recover attorney fees. The trial court determined "as a matter of barnyard equity" that the contractor, although he prevailed, was not entitled to attorney fees because of the sloppy workmanship. The appellate court reversed, essentially holding that the Second District Court of Appeals would follow the rule that there must be a determination of a prevailing party in every lien foreclosure case. Because the contractor won an affirmative recovery greater than was offered prior to suit on the lien, the owner had to pay the contractor's legal fees.

The lesson is clear. Contractors and subcontractors should endeavor to perform their work in accordance with the plans and specifications and in accordance with the level of quality contemplated by the contract. However, if the owner views the performance as deficient, payment is due for substantial performance (although a setoff may be appropriate for required corrections). A significant exception to the substantial performance rule is where the contractor intentionally fails to comply with the contract. If the contractor intentionally furnishes a lesser quality than is specified, substantial performance will not carry the day.