Final answer:
The legal issues likely to arise involve an evaluation of whether the material deviation constitutes a breach of contract, and what remedies are available to both parties. The court will examine the terms of the contract, any implications of substantial performance, and the remedies like rescission or damages. These outcomes depend on the specific facts and the contract's stipulations.
Step-by-step explanation:
In the scenario where Danny hires Evelyn to install a swimming pool for $40,000 with a specified completion date, and a deviation from the agreed-upon materials is found, leading Danny to refuse payment, multiple legal issues related to breach of contract and performance specifications may arise if Evelyn decides to sue Danny for the contract price. In a breach of contract case, the court would assess whether the deviation materially affected the value or purpose of the contract, taking into consideration things such as substantial performance, implied warranties, and whether Danny's refusal to pay was justifiable. If the breach is determined to be minor, Evelyn may still be entitled to the contract price minus any damages that Danny may have incurred due to the deviation. Should the breach be substantial, Danny may have the right to rescind the contract and seek damages or demand a cure of the deviation. These determinations are highly fact-dependent and will be dictated by the specific terms of the contract and applicable laws.