Divisible Contract & Substantial Performance Flashcards
What is a divisible contract?
A divisible contract is a contract that provides for performance by installments or stages with separate payment for each installment/stage. The divisible parts could be performed independently of each other.
Even if the contract is not completed, payment can still be claimed for each part of the divisible contract that has been completed.
Give 1 example of a divisible contract.
In modern building contracts, it is common to provide for progress payments to be made against the production of the architect’s certificate for the completion of each stage of the work done.
What is the doctrine of substantial performance?
If the contractor has completed a major part of the renovation works leaving only minor outstanding work, he could claim for payment for the work done minus the amount to make good the defects. It is a question of fact whether the performance is substantial and the breach is not a material breach.
What is an indivisible contract?
An indivisible contract, or otherwise called a lump sum contract or entire contract provides for full payment on the completion of the entire contract.
