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Pretsfelder v. W.P. Industries

A-4008-98T3 (N.J. Super. App. Div. 2000) (Unpublished)

CONTRACTS; REMEDIES—Recission is an equitable remedy only available in limited circumstances where a court can return the parties to their original positions.

Under a written contract, a roofing contractor agreed to install a new roof over an existing roof on a commercial building and gave a ten year guarantee against leaking with a promise to repair the roof during that period. Shortly after completion, “sporadic” leaks began, and several years later a severe storm caused major leakage. The contractor provided the necessary repairs for the first five years of the guarantee, but thereafter refused to perform any additional repair work. The owner of the building sued and the lower court held that the owner was entitled to a refund of the contract price plus an additional $15,000 for interim repairs. It reasoned that the owner was entitled to a recission of the contract “to put the parties back in as good a position as they were.” The contractor conceded that it had breached the ten year guarantee contract, but appealed the measure of damages. According to the Appellate Division, because the owner did not sue for recission, the lower court was wrong in returning the contract price. Recission is an equitable remedy, only available in limited circumstances. Although recission is discretionary, it may not be employed unless a court can return the parties to their original positions. Here, returning the parties to their original positions was impossible. The Appellate Division, relying on 525 Main Street Corp. v. Eagle Roofing Co., held that the proper measure of damages was: (1) the difference between the value of the entire building with the defective roof and the value of the building if the contract had been performed, (2) the cost of repairs, or (3) the cost of replacement if replacement is necessary to obtain the promised performance. On these bases, the Appellate Division found the proper measure of damages to be the cost of repairs.

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