When parties enter into a contract, there is an expectation that they will fulfill their respective obligations as agreed upon. However, circumstances may arise that prevent one or both parties from meeting their obligations precisely as specified in the contract. In such cases, a contract may be discharged by substantial performance.
Substantial performance refers to the concept that a party has fulfilled their obligations under the contract to a degree that is almost equivalent to perfect performance. In other words, the party has made a good faith effort to perform their obligations in a reasonable manner, and any minor deviations from the contract terms are not significant enough to warrant a breach of contract.
To discharge a contract by substantial performance, the following factors must be present:
1. The breach must be minor
The party claiming substantial performance must have only deviated from the contract terms on a minor issue. If the breach is significant and has a significant impact on the other party`s ability to fulfill their obligations under the contract, then substantial performance cannot apply.
2. The deviation must not be intentional
The party claiming substantial performance must have deviated from the contract terms unintentionally or in good faith. If the deviation was deliberate or designed to benefit the party claiming substantial performance to the detriment of the other party, then substantial performance cannot apply.
3. The deviation must not deprive the other party of the benefit of the contract
The deviation must not have a significant impact on the other party`s ability to fulfill their obligations under the contract or deprive them of the benefits they expected to receive under the contract.
4. The deviation must be curable
The deviation must be curable, meaning that the party claiming substantial performance must be able to correct the deviation or compensate the other party for any damage caused by the deviation.
When a party claims substantial performance, the burden of proof is on them to show that they have substantially performed their obligations under the contract. The other party has the right to dispute the claim of substantial performance and may seek damages for any losses suffered as a result of the deviation.
In conclusion, substantial performance is a legal concept that allows a party to discharge a contract when they have substantially performed their obligations under the contract. The deviation from the contract terms must be minor, unintentional, not deprive the other party of the benefits of the contract, and be curable. However, claiming substantial performance is a complex legal process, and it is recommended that parties seek the advice of legal counsel before making such a claim.