Contract Law

Cutter v. Powell

(1795) 101 ER 573

Facts

Cutter agreed to serve as second mate on a voyage from Jamaica to Liverpool.
Powell promised to pay him a fixed lump sum after the ship reached Liverpool.
The payment promised was substantially higher than the ordinary wage for comparable service.
The contractual wording made payment dependent upon Cutter continuing, performing his duty and completing the voyage.
Cutter performed a large portion of the voyage.
He died before the ship reached Liverpool.
His widow sought a proportionate part of the promised payment for the period during which he had served.
Powell resisted the claim, arguing that the contract required complete performance as a condition precedent to payment.

Whether Cutter’s estate was entitled to payment for partial performance.
Whether the contract was an entire contract requiring complete performance before any payment became due.

Where a contract promises a lump sum upon complete performance of an entire obligation, complete performance may be a condition precedent to payment.
If the obligation is entire and indivisible, substantial or partial performance does not automatically create a right to a proportionate price.
The court must interpret the contract to determine whether:
payment accrues progressively; or
payment becomes due only after complete performance.
Modern doctrines such as substantial performance, quantum meruit and statutory employment protection may soften the rule, but the original case applied the strict entire-obligation principle.

The payment was not framed as a monthly wage.
It was a single sum payable after the vessel arrived in Liverpool.
The unusually high amount indicated that Cutter accepted the risk associated with completion.
The bargain was therefore not merely an ordinary wage arrangement.
It was an all-or-nothing promise:
Cutter would receive the full amount if he completed the voyage;
nothing became contractually due if the condition was not fulfilled.
His death was not his fault, and the result was harsh.
Nevertheless, the Court treated completion as the express basis of the promised payment.
It refused to rewrite the bargain into a daily or proportional wage agreement.
The estate could not rely on partial performance because the contract did not apportion the price.
Nor could it use quantum meruit to contradict the express condition governing remuneration.

The Court held that Cutter’s widow could not recover a proportionate payment.
Completion of the voyage was a condition precedent to the lump-sum payment.
Use this case for: under an entire contract, no payment may become due unless the promised performance is completed.