22. Is the builder likely to prevail in a suit for the agreed-upon price of the first structure?

A contract will be considered «divisible» if three elements are satisfied: (i) the contract divides each party's performance into at least two parts; (ii) each party has the same number of parts they are obligated to perform; and (iii) each party's performance on each part is agreed to be the equivalent of a corresponding part for the other party (i.e., the performance of each part is the quid pro quo of a part for the opposing party). This analysis relies on fairness, meaning courts focus on preventing hardship and forfeiture. If a contract explicitly states that it is indivisible, the court is not permitted to find it divisible.

When one party performs a single unit under a divisible contract, he is entitled to recover the amount that was agreed upon or the equivalent even if he does not perform the other units or before the entire contract is performed. However, if the partially performing party does not then perform the remaining duties under the contract, he will be subject to liability and the withholding of counter-performance for those units.

A party's basic duty at common law is to substantially perform all that is called for in the contract. This means that a party who substantially complies with a condition of a contract, whether implied or express, can obligate the other party to perform.

D is correct. A divisible contract entitles a party to recover the amount due for a completed unit under that contract, even before completion of the entire contract. This area of contract law acknowledges that parties sometimes combine separate obligations into a single contract. Here, the contract is divisible because it divides performance into three parts, each unique with its own specified structure and price. The landowner contracted to pay three separate prices for three structures to be built by the builder on three tracts of land. It is appropriate for the builder to recover the amount for the first structure as a divisible unit, but the landowner will still be able to recover damages if the builder fails to complete the other two structures.

A is incorrect. The doctrine of substantial performance does not apply here because the builder did substantially perform as to the first structure, which is divisible under the contract. As stated above, the builder will be able to recover for this first completed structure, although the landowner will maintain the ability to recover damages if the builder fails to complete the remainder of the contract.

B is incorrect. The builder's decision to stop performance after completing the first structure does not amount to a willful breach of the contract that would prevent him from recovering for this divisible unit. Although the landowner may seek damages if the builder does not complete the other two structures, this does not negate the builder's recovery regarding the first completed structure. Again, the obligations of the builder were severable for purposes of damages, so the landowner will not preclude the builder from recovering as to the first structure based on his choice not to complete the other two.

C is incorrect. This answer is only partially correct. The contract is divisible, for the reasons provided above, but the landowner will not be required to bring a separate claim regarding the other two structures. Even when a contract is divisible, the resolution of the remainder of the contract duties does not necessitate separate causes of action. If an injured party were required to bring separate actions, this would be inconsistent with the legal system's goal of efficient disposition, in a single action, of closely-related claims. As such, the builder is likely to recover the agreed price of the first structure, less any recoverable damages caused to the landowner in the event of the builder's breach.