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    H.O'leary vs. Macondray and Co. Inc.

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    Sharlie Bayan
    H. O'Leary entered into a contract with Macondray and Co. to construct a building for actual costs plus 12.5%. When near completion, Macondray refused payment, alleging negligence and damages. The court ruled in favor of O'Leary, finding that under the loosely drawn contract, which gave O'Leary discretion over construction, he would not be liable for honest mistakes or errors in judgment made in good faith. The contractor is not personally responsible when the contract gives discretionary power and any mistakes were made honestly.

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    H.O'leary vs. Macondray and Co. Inc.

    Uploaded by

    Sharlie Bayan
    90 views2 pages
    H. O'Leary entered into a contract with Macondray and Co. to construct a building for actual costs plus 12.5%. When near completion, Macondray refused payment, alleging negligence and damages. The court ruled in favor of O'Leary, finding that under the loosely drawn contract, which gave O'Leary discretion over construction, he would not be liable for honest mistakes or errors in judgment made in good faith. The contractor is not personally responsible when the contract gives discretionary power and any mistakes were made honestly.

    Original Title

    7. H.O'leary vs. Macondray and Co. Inc.

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    H. O'Leary entered into a contract with Macondray and Co. to construct a building for actual costs plus 12.5%. When near completion, Macondray refused payment, alleging negligence and damages. The court ruled in favor of O'Leary, finding that under the loosely drawn contract, which gave O'Leary discretion over construction, he would not be liable for honest mistakes or errors in judgment made in good faith. The contractor is not personally responsible when the contract gives discretionary power and any mistakes were made honestly.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    90 views2 pages

    H.O'leary vs. Macondray and Co. Inc.

    Uploaded by

    Sharlie Bayan
    H. O'Leary entered into a contract with Macondray and Co. to construct a building for actual costs plus 12.5%. When near completion, Macondray refused payment, alleging negligence and damages. The court ruled in favor of O'Leary, finding that under the loosely drawn contract, which gave O'Leary discretion over construction, he would not be liable for honest mistakes or errors in judgment made in good faith. The contractor is not personally responsible when the contract gives discretionary power and any mistakes were made honestly.

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    TOPIC: Breach (Mode) Fraud/Dolo

    G.R. No. L-21383 March 25, 1924

    H. O'LEARY, plaintiff-appellee,
    vs.
    MACONDRAY and CO., INC., defendant-appellant.

    WHEN CONTRACTOR NOT LIABLE.—Where his contract of employment gives him discretionary
    power, a contractor is not personally liable for honest mistakes or errors of judgment.

    FACTS: H. O’leary entered in an agreement with Macondryay and Co. Inc. for the construction of
    a building for the firm of Macondray and Co. Inc. for the amount of actual cost plus twelve per
    cent and one-half per cent with payments to be made monthly. H. O’leary commenced the
    construction of the building under the supervision of an architect, and continued the work
    thereon until near its completion, and kept and performed all the terms and provisions of the
    contract. No payment was made to H. O’leary for the cost plus 12 ½%, so he filed a complaint.

    On his first response, Macondray and Co. Inc., admitted the making of the contract and the
    formal allegations of the complaint. However, on his amended answer he denies all other
    material allegations, and, as a special defense, alleges that, through plaintiff's negligence in the
    construction of the building and the purchase of materials, the company incurred damages.

    The trial court rendered judgment in favor of H. O’leary, hence this petition.

    ISSUE:
    WON H.O’leary shall be held liable for breach of contract on the mistakes and errors of
    judgment made in good faith? (NO)

    RULING:

    No. The court held that, the contract was very loosely drawn. No date is specified in which the
    building is to be completed, and time is not made the essence of the contract. The counterclaim
    of the defendant that the labor was not furnished and that the materials were not purchased is
    untenable. Assuming that there were mistakes and errors of judgment only, the plaintiff would
    not be liable for them under the contract. The fact that the price of lumber or of labor went up
    or down, or was cheaper at a certain time, would not make the plaintiff liable for a breach of
    contract, so long as he was exercising his best judgment and acting in good faith.

    Further, under the terms of the contract, the employment of labor, the purchase of materials
    and the completion and construction of the building were all matters which were largely left to
    the discretion of the plaintiff, for which he would not be liable for honest mistakes or errors of
    judgment.

    The judgment of the lower court is affirmed, with modifications as to the computation of
    interest.
    TOPIC: Breach (Mode) Fraud/Dolo

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