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Hoenig v Isaacs  2 All ER 176
The performance of a contract and the right to terminate for repudiatory breach.
A contract was concluded for the redecoration of a one-room flat for the lump sum of £750. Upon completion, there remained an outstanding of balance of £350 for the contractor’s work and labour. There were certain defects in the bookcase and wardrobe, the cost of repair of which was £55. The employer refused payment of the outstanding balance, claiming a repudiatory breach of the contract due to a failure to perform the contract.
The question arose as to whether the entire performance of the contract was a condition precedent to payment.
As a matter of law, the Court held that whether the entire performance of a contract is a condition precedent to payment depends on the construction of the specific contract. In the case of a contract for work and labour for a lump sum payable upon completion, the Court held that a contractual promise to complete the work is an innominate term of the contract and not a condition precedent to payment. In such contracts, an employer cannot deprive the contractor of any payment for completed work due to the presence of some defects. Only breaches that ‘go to the root of the contract’ entitles the employer to repudiate liability and refuse payment. On the facts, the work under the contract had been completed and the defects did not go to the root of the contract. As the employer is taking the benefit of the completed work under the contract, the entire performance of the works is not construed as importing a condition precedent to the stipulated payment, but solely as an innominate term giving rise to damages for defects. Thus, the employer was bound to pay the contract price, yet entitled to deductions for the defects.
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