American Standard v. Schectman

For 26 years, American Standard, Inc. ("Standard") operated a pig iron manufacturing plant near Niagara Falls, New York. However, in 1972, Standard closed its plant & hired Mr. Schectman who was a demolition & excavation contractor.

In accordance with the contract, Standard paid Schectman $275,000 to (1) remove equipment, (2) demolish structures, and (3) grade the land.

Schectman cut corners: he left the plant ungraded because grading would have cost him $90,000.

Standard sued Schectman in the Erie Supreme Court for breach of contract. Schectman lost.

Can an injured party recover damages for the cost of completion of a construction contract?

Schectman argued that Standard didn't suffer any damages. Schectman offered proof that Standard sold the land for $180,000.

Yes. A party can recover damages for the cost of completion of a construction contract if the breaching party fails to substantially perform the contract in good faith.

(Damages for incomplete performance) = (Diminution in Value)

Quimbee: "In the context of a construction contract, diminution-in-value damages are measured by the difference between the value of a structure with a defect & the value of the structure absent the breach."