Substantial Performance in Contracts

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What Is Substantial Performance?

Sometimes a party to a contract may still be paid under (or retain the benefit of) the contract even though they have not fully complied with the specific terms of the contract. 

If a court finds that one party has performed enough of the contract, the other party will not be able to get out of the contract.

When Has a Party Substantially Performed?

Exceptions to the Doctrine of Substantial Performance

What Can You Recover if a Party Has only Substantially Performed their Obligations under the Contract?

If the other party has substantially performed you must pay them for the real value of their service minus what it would cost you to fix their mistakes. Or, if this remedy isn’t appropriate, you must pay them the value of their service or benefit.

Although substantial performance usually applies to building and construction contracts, it can also apply to other types of contracts.  For example, in an employment contract, an employee may substantially perform as a prerequisite to becoming entitled to a benefit.

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Last Modified: 10-24-2012 11:46 AM PDT

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