Substantial performance refers to a level of contract fulfillment that is not complete but is close enough to warrant payment. In contract law, it recognizes that a contractor may not meet every obligation but has fulfilled enough of the agreement that denying payment would be unjust. However, the owner retains the right to seek compensation for any damages resulting from the contractor's incomplete performance.
This term is primarily used in contract law, which governs agreements between parties. Substantial performance plays a crucial role in determining whether a party can enforce a contract or seek damages. It is relevant in various legal contexts, including civil disputes related to construction contracts, service agreements, and sales contracts. Users can manage some aspects of these agreements through legal templates available on platforms like US Legal Forms.
Here are a couple of examples of abatement:
Example 1: A contractor builds a house but fails to install the final fixtures. If the house is otherwise livable and the owner can still use it, the contractor may claim substantial performance and receive payment for the work completed.
Example 2: A service provider completes 90 percent of a contracted project but does not meet a minor deadline. The client may still owe payment, provided the service delivered meets the essential terms of the contract. (hypothetical example)
Examples of state differences (not exhaustive):
| State | Substantial Performance Definition |
|---|---|
| California | Recognizes substantial performance but requires the contractor to prove that the work completed is sufficient to fulfill the contract's primary purpose. |
| New York | Allows for substantial performance claims but emphasizes the need for the contractor to demonstrate minimal defects that do not affect the overall contract. |
| Texas | Substantial performance is acknowledged, but the contractor must show that the defects are minor and do not prevent the owner from using the property as intended. |
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
If you find yourself in a situation involving substantial performance, consider the following steps:
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Substantial performance is a legal term indicating that a party has fulfilled enough of their contractual obligations to warrant payment, despite not completing every aspect of the agreement.