Defective Work & Offers to Cure: Is the Offer to Cure Enough?
In Fisher v. Rondo Pools, 1 CA-CV 18-0343 (Ariz. App. 2019), an owner terminated a contractor mid-project for various defaults. The owner sued, and the jury found the contractor did not materially breach the contract because the contractor had offered to cure its defaults. On appeal, the court upheld the verdict using the “materiality” test in Restatement (Second) of Contracts § 241 (1981). Per the Restatement, “the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances” is a factor to consider when deciding whether a breach of contract is material.
The owner in Rondo Pools argued that this ruling could result in an owner “‘stuck’ with an incompetent contractor so long as the contractor was willing to try to fix its mistakes.” The court responded that the jury instruction hinged on whether the breaching party will cure its failure and its ability to make reasonable assurances. To use the language of the Restatement, the contractor must be likely to cure its default.
The contractor did not need to cure the defaults or even commence to cure the defaults. A sincere offer to cure was enough even though the contract did not give the contractor an express right to cure.