Question

On 11 August 2020, Vanya Ho entered into a contract with Diego Toh to renovate her school, The Umbrella Learning Centre and to set up the internet system for the school’s online lessons starting in October. They agreed to the total sum of $100,000 with a 10% deposit of $10,000 to be paid on the signing of the contract. $20,0000 was to be paid upon the design being approved by Vanya Ho. The balance of $70,000 was to be paid on the completion of the renovation works. The contract provided that Diego Toh was to complete the renovation works and handover the school to Vanya Ho not later than 20 September 2020.

The design was approved by Vanya Ho on 18 August 2020. Diego Toh proceeded with the renovation which was completed on 19 September 2020. Vanya inspected the renovation work on 20 September 2020. She was not pleased with the internet system when she tested the wifi connection. The wifi signals were weak and created issues for running the online lessons. Diego Toh explained that his electricians have gone back to Malaysia and would only be back early 2021. He insisted that the renovation works including the setting up of the internet system were in accordance with the design as approved by Vanya.

On 21 September, Vanya Ho called an independent electrician, Klaus Soh, to inspect and advise on internet system. Klaus Soh explained that the internet system was poorly set-up. He quoted $2,000 to rectify the defects which could be completed by 25 September 2020.

On 22 September, Diego Toh contacted Vanya Ho and demanded payment of the balance amount of $70,000. Vanya Ho refused to pay the balance and insisted that Diego Toh rectify the internet system by 26 September 2020.

Advise Diego Toh on the following:

Diego Toh would like to claim the full amount of $70,000. Discuss the LEGAL PRINCIPLES concerning the performance of the contract, APPLY the legal principles, and CONCLUDE on whether Diego Toh could discharge the contract with Vanya Ho and claim the full amount of $70,000.

Answer 1

The discharge of the duties in a contract where the performance matters that contract is said to be discharged by performance. The contractual obligation is very strict so that the work so performed is discharge with all the due care and precision.

Exception to this rule is the rule of De minimus non curat lex i.e. law doesn't care about trivialities. This means that the court doesn't hear the trifling matters. If the deviations are microscopic then they shall be ignored. If the de minimus is not applicable in a situation then it will tantamount to breach.

In the present case, the work of establishing an internet set up requires experties and skills and it should be discharge with proper care and professionalism. If it is impossible for a party to perform the work as described then it would be Breach of contract. Hence, poorly set up internet system is a breach of contract and therefore keeping Vanya Ho at the position where she can refuse the payment. The purpose of renovation was totaly ruined. Diego Toh cannot claim the full amount.

CASE LAW

Dakin v lee [1916] 1 KB 566

The defendants promised to build a house according to the specifications and could not carry out the work as desired. The concrete was not properly mixed, concrete was not of the desired size. The Court of Appeal held that the builders were entitled to recover contract amount less than the agreed amount, compensating the defects so found.