Substantial Performance
"What does substantial performance mean in the context of discharge or termination of contractual obligations on the basis of performance?
A contract may be terminated by discharged of performance once both contracting parties have completely fulfilled their contractual obligations. A general rule of discharge by performance requires the complete and exact performance of the contractual obligations.1 Once performance has been completed it is required that payment be made. However, if a contracting party does not perform the contract, the other party may be released of their obligations or have a claim in damages as a result of breach/repudiation. Cutter v Powell2 established the principle of “restitution for work done under an entire contract will not be available if the contract is frustrated before performance is complete.”3
Contracts also arise which have only been partially performed, giving rise to a claim for restitution in quantum meruit.4 In these circumstances, the contracting party who performed may give rise to an action of unjust enrichment on the basis of seeking recovery through supplying the other party a benefit.5 However, through partly performing a contract, the actions of seeking damages to perform as specified, or seeking specific performance to enforce the contract to be completed, arise to the party the performance was promised to. It must be determined whether performance must comply with the terms of the contract. The criteria that is usually used for this includes; the construction of the terms in the contract, if the partial performance of the contract has been accepted by the other party and whether full performance has been prevented by the other party. The obligations which are specified under a contract come to be either divisible or entire.
Divisible obligations are where the parties have intended the contract price and contractual obligations to be divided into corresponding parts, such as in contracts or the sales of goods to
A contract may be terminated by discharged of performance once both contracting parties have completely fulfilled their contractual obligations. A general rule of discharge by performance requires the complete and exact performance of the contractual obligations.1 Once performance has been completed it is required that payment be made. However, if a contracting party does not perform the contract, the other party may be released of their obligations or have a claim in damages as a result of breach/repudiation. Cutter v Powell2 established the principle of “restitution for work done under an entire contract will not be available if the contract is frustrated before performance is complete.”3
Contracts also arise which have only been partially performed, giving rise to a claim for restitution in quantum meruit.4 In these circumstances, the contracting party who performed may give rise to an action of unjust enrichment on the basis of seeking recovery through supplying the other party a benefit.5 However, through partly performing a contract, the actions of seeking damages to perform as specified, or seeking specific performance to enforce the contract to be completed, arise to the party the performance was promised to. It must be determined whether performance must comply with the terms of the contract. The criteria that is usually used for this includes; the construction of the terms in the contract, if the partial performance of the contract has been accepted by the other party and whether full performance has been prevented by the other party. The obligations which are specified under a contract come to be either divisible or entire.
Divisible obligations are where the parties have intended the contract price and contractual obligations to be divided into corresponding parts, such as in contracts or the sales of goods to