On April 1, 2014, the Missouri Court of Appeals handed down a significant construction contract dispute decision. In Hall v. Fox, WD76147, 2014 WL 1303391 (Mo. Ct. App. Apr. 1, 2014), the Court of Appeals affirmed the trial court's judgment. Fox entered into a contract with Hall to construct an addition to the Abbey Woods facility. Prior to entering into the contract, Hall submitted his bid to Fox with a quoted price of $50,000. Hall's bid included a statement that the quoted price included all materials, labor, permits and all other related items in to architectural plans. Fox reviewed several other bids but ultimately decided to hire Hall. Throughout construction of the addition, Hall sent bills to Fox for payment of labor and material costs. Fox paid the bills until she realized that she had already paid Hall more than the amount quoted in Hall's bid. Fox refused to pay any further bills and, as a result, Hall did not finish the addition.

Hall sued Abbey Woods and the Foxes for breach of contract for failing to pay the outstanding bills. Abbey Woods and the Foxes filed a counter-claim, arguing Hall breached the contract by failing to complete construction. The trial court sided with Abbey Woods and the Foxes, finding that Hall breached his contract by failing to finish the addition. Fox appealed the judgment, contending that he did not breach the contract because there was no mutual understanding of the terms of the contract since he billed on a time and materials basis but Fox thought the contract was for a fixed price.

The Court of Appeals upheld the trial court's judgment. While acknowledging that the contract was silent about how or when Hall was to be billed, the Court found the conduct of the parties established mutual assent to the terms of the contract. The Court determined that Fox's selection of Hall's bid with the quoted price of $50,000, as well as her failing to pay Hall's bills after realizing she already paid more than $50,000, showed that there was mutual assent as to how payment was to be made.

Hall argued that there was no mutuality of assent to the terms of the contract because the course of conduct suggested a time and materials based contract and not a fixed priced contract. The court disagreed and found that the parties' words and conduct demonstrated the contract was for a fixed price. To determine whether there is mutual assent to the terms, courts look to the intentions of the parties as expressed or manifested in their words or acts." L.B. v. State Comm. of Psychologists, 912 S.W.2d 611, 617 (Mo. App. 1995). In determining if the parties' words and actions demonstrate mutual assent, the standard used by the court is "what a reasonably prudent person would be led to believe from the actions and words of the parties…" Silver Dollar City, Inc. v. Kitsmiller Constr. Co., 931 S.W.2d 909, 914 (Mo. App. 1996).

St. Louis Construction Contract Lawyers

Use of time and material contracts are not uncommonly used by Missouri contractors. Contract language must be clear when the ultimate cost of the project is not known or that a fix rate is simply an estimate of the ultimate protect price.

If you have any questions regarding a construction contract dispute, contact our firm directly at (314)645-4100 or by email at kevin@dolleylaw.com.