Compensatory Damages - Breach or Repudiation by Payor Case: New Era Homes Corp. v. Forster (1949, NY) [pp.

901-904]

Facts: New Era (P) entered into a K with Forster (D) to make improvements on D's home. All materials and labor for $3,075 were to be paid in installments, as follows: $150 on signing of the K $1000 upon delivery of materials, and starting of work $1500 upon completion of rough carpentry and rough plumbing $425 upon job being completed. After the rough carpentry and rough plumbing were completed, the $1500 came due and Forster did not pay. P stopped work and sued D for the remaining balance $1500+$425. Lower court held that P was entitled to the work it had done, and awarded them $1500. Defendants appealed. Issue: Holding: Whether the K was a whole, or if it could be broken up into components. judgment reversed, remanded for new trial.

Reasoning: The court said that the consideration for all the work was $3,075, and the parties intended the payments broken up for purposes of making installment payments at convenient intervals, not that they would pay for each part as it is completed. For example, $150 for signing the K doesn’t make sense. Therefore, since the K cannot be broken up, then P could either collect the value of work that had been done (quantum meruit), or the value of what P had lost (the K price, less payments made and less the cost of completion). Dissent: Argues that K is divisible and agrees with lower court's holding.