The owner of a bed and breakfast hires an artist to paint murals in five bedrooms; Payment is due upon satisfactory completion of all five rooms. The owner asks the artist to change the color palette in the remaining rooms; The artist refuses and terminates the contract. What damages is the artist likely entitled to recover?

• A. The artist may recover the reasonable value of services performed, less any damages to the owner caused by the breach.
• B. The owner may recover the full contract price.
• C. The artist may recover the actual expenditures plus anticipated profits.
• D. The owner may recover only incidental damages.

Answer: (A)

When a contract for services is whole and payment is due only after complete, satisfactory performance, damages for a party who breaches by terminating after performing some work are based on the value of what has been done, not the full contract price. The artist can recover the reasonable value of the services already performed, but that amount is reduced by any damages the owner suffered because of the breach. This prevents overcompensation and reflects the actual partial performance and its impact on the nonbreaching party.

In this scenario, the artist has completed some work, so they’re entitled to payment for that value, minus the owner’s damages caused by the breach. The other options don’t fit because they either seek the full contract price (not appropriate when not all work is done), promise actual expenditures plus anticipated profits (not the standard measure for a partially completed services contract), or limit the owner’s recovery to incidental damages (the artist’s damages are at issue).