Substantial performance in a contract dispute is a doctrine that allows one party to require payment from the other even if their contract duties were only partially performed. The doctrine states that if the performance was “substantially” completed, or completed in a way that is actually satisfactory, it may require payment according to the contract terms.
Substantial performance is a helpful doctrine that may allow the parties to avoid a more costly and complex filing for breach of contract. However, the parties may still need to go to court if they need to determine whether the performance was substantial enough to warrant payment. This may require the presentation of various points of evidence in support of the performance. Substantial performance will not be an issue if the contract specifies that the work absolutely needs to be fully completed.
In order to prove substantial performance, courts have used two main standards:
- Whether the promisor was actually satisfied by the work; or
- Whether a reasonable person would be satisfied under similar conditions
The choice of which standard to apply will be determined by several factors, such as the relationship of the parties to one another, the subject matter of the contract, economic conditions, and local or state laws.
For example, if a contract was made requiring one party to paint a home, and the work was not completed fully, the court may ask whether the homeowner was satisfied with the work up to that point. This is the standard that is applied if “personal taste” is an issue with the project. Or, they may ask what a “reasonable person” would think about the paint job in such situations. This is the standard applied if there are adequate industry standards for the work.
When it comes to actually proving whether these standards were met, the parties may introduce various items of evidence, including:
- Market standards that govern that particular field of services or goods;
- Comparisons with previous work that the parties have performed or approved;
- Expert appraisal of the work
- Fair market values of products as well as resale prices
Since every contract is different, and prices of services and goods usually change over time, each contract claim may be reviewed on a case-by-case basis when it comes to substantial performance. This may require the expert knowledge of a contracts lawyer for support and representation in court.
Proving substantial performance in a contract claim may involve many different determinations and analyses of the evidence. It’s to your advantage to hire a business lawyer for help with issues like substantial performance of contract duties. Your attorney can advise you regarding the contract laws in your area. Also, your attorney will be able to explain your legal options and rights with regards to the contract.