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Is Substantial Performance a Breach of Contract

Substantial Performance and Breach of Contract: What Every Business Owner Should Know

Contracts are legally binding agreements between two or more parties, and the terms stated therein must be upheld by all parties involved. However, what happens when one party fails to perform their obligations but has still made a good faith effort to complete the work? This is where the concept of “substantial performance” comes into play.

Substantial performance refers to a situation where a party has completed the majority of their obligations under the contract but may have minor or immaterial deficiencies. In such cases, the party who has substantially performed their obligations is entitled to receive compensation under the contract.

The doctrine of substantial performance is essential because it allows the parties involved to avoid costly litigation and settle their disputes outside the courtroom. Instead of getting bogged down in minutiae and technicalities, the court will evaluate whether the party has substantially performed their obligations and determine if the contract has been breached.

It`s important to note that substantial performance does not excuse a party from fulfilling all their obligations under the contract. If the deficiencies are significant enough to prevent the other party from receiving the full benefits of the contract, then substantial performance may not be enough to avoid a breach of contract claim.

For example, if a contractor has been hired to build a house and has completed the work but has left out crucial components such as electrical wiring or plumbing, that party has not substantially performed their obligations as outlined in the contract. In such cases, the other party may have the right to terminate the contract and seek damages.

In summary, substantial performance can be a valid defense against a breach of contract claim. Still, it`s important to evaluate the extent of the performance and whether it has prevented the other party from receiving the full benefits of the agreement. As always, it`s best to consult with an experienced attorney to evaluate your specific situation and determine the best course of action.

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