New Era v. Forster
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| New Era v. Forster | |
| Court | New York Court of Appeals |
|---|---|
| Citation | 86 N.E.2d 757 |
| Date decided | June 3, 1949 |
Facts
- New Era Homes Corp. = "New Era" = plaintiff = a construction firm
- Forster = defendant = person who hired "New Era" for home renovation
- The total price in the contract was $3,075
- $150 at contract signing
- $1,000 at delivery of materials
- $1,500 rough work
- $425 upon completion
- New Era commenced the construction project.
- Forster made the 1st 2 payments.
- At the work stage, Forster refused to make the 3rd payment.
Procedural History
- New Era sued Forster.
- New Era demanded $1,500 for the rough work.
- Forster accepted his default on the contract.
- The jury awarded New Era $1,500.
- New Era also won in the Appellate Division.
Issues
Is a contract with periodic partial payments divisible such that each payment is consideration for a specified portion of the contract?
Arguments
Forster argued that he should be allowed to pay less than $1,500 for the rough work.
Holding
No. A contract with periodic partial payments is an entire contract with 1 consideration for the full job.
- New Era can either
- collect in quantum meruit or
- for the value it had lost
Judgment
Reversed
Reasons
In a construction contract, the separate payments aren't allocated to separate components of the job. In these construction contracts, 1 whole contract exist. Thus, you cannot take that 1 contract & creates separate sub-contracts.
Rule
- Installment Contract = separate payments
- Divisible contract = separate performances
- Construction contracts are presumed not to be divisible.
