Performancee

The problems which arise in contract performance vary with the type of contract. For this reason, it is difficult to address performance issues in a simple way. Performance of leases, construction contracts, leases, sales contracts, legal retainers, and government contracts, for example, all present special problems. This is an introduction to some of the basic issues which arise in connection with peformance of contracts.

We started our discussion of the law of contracts with a contract between father and son. Father promised son a car in return for son's promise to get straight A's in school. What happens if son performs as promised, but then his father fails to deliver the car. Can the son force his father to deliver the car; or can he only make his father pay the value of the car. If the son feels humiliated by father's failure to perform, may he recover damages for that humiliation. If, for want of the car, the son loses a job opportunity, can the son sue for lost wages? Suppose the son almost get's an A average. Is that a "material breach" of the contract excusing father's non-performance? Supposing brother constantly plays the radio, preventing son from studying, supposing father refuses to make brother turn off the radio, does that excuse son's non-performance? Or does it allow son additional time to perform? What if son is seriously ill, and misses an exam? Suppose father loses his job. And so on.

We cannot answer all of these questions. But we can make a start.

Conditions A contract requires mutual cooperation. It is an exchange of performance based upon an exchange of promises. Suppose owner hires contractor to sheetrock a new home by September 1. When the contractor arrives at the home site to sheetrock on August 25, he finds that the electrician and plumber have not completed their work. Sheetrocking cannot go forward. It is an implied condition of the contract, that the owner will have the building site ready for sheetrocking. The sheetrocker's duty to complete by September 1 has been excused by the owner's failure to have the site ready. But is he excused from sheetrocking at all? Must he nonetheless sheetrock in a reasonable time? Is he entitled to a greater price, because he had to sheetrock at an inconvenient time? Was the implied condition, then, also an implied promise?

Can I cancel the contract? Distinguish between a breach as excuse for non-performance of reciprocal promise (or contract termination), versus a breach as furnishing a right to damages without the right to terminate the contract altogether, or as merely furnishing the right to delay or alter the promised performance. When a party fails to perform some aspect of the contract, it may, in some instances, excuse absolutely the reciprocal peformance. When a party's breach is serious enough to justify termination of the contract, we call that a material breach.

• How do you figure out whether a breach is material? And what are the consequences for making a mistake.

Suppose, for example you order the Encyclopedia Brittannica. When it arrives, Volume 1 is missing the last page. You can immediately return the entire set for a full refund, because (we assert) a sale of goods of this kind requires vertually perfect performance. In this case, the Uniform Commercial Code helps us solve the problem. Under the Uniform Commercial Code, the buyer is entitled to reject delivery even if done promptly within a reasonable time to inspect. A small defect in the goods constitutes a material breach in this case. Here is an example, then of a contract in which a small defect in performance constitutes a material breach. But strict performance is not an excuse for cancelling in all contracts. The Uniform Commercial Code distinguishes between a buyer's rights at the time of acceptance of goods and buyer's rights to revoke acceptance upon later discovery of a problem. The code provides a series of guideposts to assist buyer and seller of goods through these issues. Other areas of the law have developed their own guideposts.

In the above example, suppose we are wrong: suppose the customer returns the merchandise thinking, wrongly, that a missing page constitutes a material breach. Suppose, that the publisher, upon receipt of the returned merchandise, merely replaces the damaged book with a good one and ships it back to the customer. What if the customer then refuses to pay? If the customer is wrong, might the publisher then defeat the customer in an action for the price.

Strict performance not required. What if you contract with a builder to provide white trimmed Anderson windows. At the time to install windows, the builder reports that Anderson no longer makes white-trim windows. Can you refuse to pay for the construction done to date, on the grounds that builder has failed strictly to perform the contract? Actually, construction law has developed a tolerance for "substantial performance", because it seems unfair to deny compensation for minor variation in the terms of the contract. The builder will still be paid for delivering a home which substantially conforms to the contract, but the owner may be entitled to some adjustment in price if he has been damaged. Notice the difference here. Strict performance is not required: payment has not been excused. The remedy is limited to damages, if any.

We cannot begin to make a proper dent in this topic. One of the best things parties can do to avoid disputes about performance and breach is to maintain good faith communication. Good business people work together and communicate in good faith.

Anticipatory Breach. What happens if you learn that the other party seems likely to breach the contract. You shouldn't have to wait until the delivery date to cancel and seek an alternative supplier. Contract law affords contracting parties the right to obtain suitable assurances of performance. A procedure for assurances is built into the uniform commercial code which applies to sale of goods. But in other contracts as well, each contracting party has the right to assurance of performance. Sometimes, although rarely, the other party announces that he won't peform. Contract law treats this anticipatory breach, and may allow the non-breaching party to treat the contract as in breach, even before the failure to perform occurs. More commonly, one receives indirect information of a potential breach. In these circumstances, a lawyer will help you obtain confirmation, will enforce your right to suitable reassurance.