Contracts Flashcards
Substantial Performance
Substantial performance is present when a party completes its contractual obligations with “no uncured material failure.” RESTATEMENT (SECOND)OFCONTRACTS § 237. Whether a failure to perform is material depends on several factors, including (1) the extent to which the injured party will be deprived of the benefit he reasonably expected, (2) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived, (3) the extent to which the other party failing to perform or to offer to perform will suffer forfeiture, (4) the likelihood that the party failing to perform will cure his failure, and (5)the extent to which the behavior of the party failing to perform comports with standards of good faith and fair dealing. Id. § 241.
Where a contract is made to perform work and no agreement is made as to payment, the work must be substantially performed before payment can be demanded.” Stewart v. Newbury, 115 N.E. 984, 985 (N.Y. 1917).
Divisibility of Contract
A contract is said to be divisible if the performances to be exchanged can be divided into corresponding pairs of part performances in such a way that a court will treat the elements of each pair as if the parties had agreed they were equivalents. E. ALLAN FARNSWORTH, FARNSWORTH ON CONTRACTS § 8.13 (3d ed. 2004).
Restitution
A party “is entitled to restitution for any benefit that he has conferred by way of part performance…in excess of the lossthat he has caused by his own breach.” RESTATEMENT (SECOND)OFCONTRACTS § 374(1).
