Court Holds Tentative Construction Proposal is Not an Enforceable Contract

Posted on: August 10th, 2016

In October 2012, Plaintiffs Brian and Tracy Liphardt hired Defendant Scott Shaw to renovate their home. The Liphardts communicated with Shaw, their friend and distant relative, about their desire to convert their garage and add improvements to their home. Shaw provided the Liphards with a document entitled “Remodel and garage addition,” which contained Shaw’s contact information and projected information regarding supplies, materials, and costs. The document contained printed lines for the customers and contractor to sign and date, but the lines were left blank. The Liphardts claimed the document was a contract.

Construction began in the fall of 2012. The Liphardts purchased all materials for the project and directly paid subcontractors. The Liphardts paid Shaw in three installments for his work on plumbing, heating, ductwork, and electrical installations. In January 2013, the Liphardts began paying Shaw’s employees directly. Shaw stopped working on the site in April 2013. The Liphardts hired other workers to complete the projects. The Liphardts claim Shaw’s work was flawed and some of the construction remained incomplete.

In July 2014, due to multiple problems throughout the construction, the Liphardt’s sued Shaw for breach of contract and unjust enrichment. The district court found no written contract existed and found Shaw was not unjustly enriched. The Plaintiff’s appealed the district court’s findings.

The Iowa Court of Appeals was presented with the issue of whether an enforceable contract existed between the Liphardts and Shaw. The Liphardts had the burden to show the existence of a written contract with Shaw. The Court found the document prepared by Shaw included no narrative to assign specific responsibilities to any party. Additionally, the Liphardts testified there were additional tasks not included on the form as part of the project. While Shaw and the Liphardts may have reached a tentative agreement, the Court found the Liphardts failed to establish a meeting of the minds.  The proposal prepared by Shaw was not sufficiently definite to determine the conditions of performance. The Court of Appeals affirmed the district court’s finding that an enforceable contract did not exist between the parties.

Liphardt, et al. v. Shaw, et al., No. 15-1746 (Iowa Ct. App. July 27, 2016).

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