In contract law, substantial performance is a term used to describe a type of performance that, while not complete, is still sufficient to fulfill a party’s obligations under the agreement. In other words, the legal doctrine sometimes allows parties to avoid facing a breach of contract claim even though they technically deviated slightly from the agreement. Here, our Ohio contract law attorney provides a more detailed overview of the key things you should know about substantial performance.
Substantial Performance: A Non-Material Deficiency May Not Be a Breach of Contract
The common law doctrine of substantial performance was created to resolve a problem in contract law. What happens if a party technically fails to abide by the terms of the agreement, but only in a relatively minor way? The American legal system has determined that it may be inequitable (unfair) to allow a breach of contract claim against a party that practically but not technically fulfilled their duties on the contract.
As cited by an Ohio court, the doctrine of substantial performance states that “merely nominal, trifling, or technical departures” may not be sufficient to constitute a breach of contract (Wengerd v. Martin). That is not to say that minor deviations should simply be waived away. Under the doctrine of substantial performance, the counterparty still has the right to deduct reasonable damages from payment to account for the minor, non-material breach. In some cases, disputes can arise over what, if anything, should be deducted from the final payment to account for a non-material breach.
Note: To constitute substantial performance under a contract, the deficiency must not be material. A material breach is defined as a significant breach that undermines the core purpose of the agreement. A material violation of the deal is a breach of the contract.
Businesses Can Require Specific and Complete Performance
In contract law, the language of the agreement is always extremely important. When businesses are coming to an important contract, it is crucial that the agreement is drafted and reviewed by an experienced attorney. Ohio courts have consistently affirmed that their duty is to uphold the agreed-upon intentions of the parties.
If the parties feel it is appropriate, they can include a “specific and complete” performance clause within their contract. Essentially, this clause eliminates the issue of substantial performance. When such a provision is present. Ohio courts will not excuse a party from a breach on the grounds of substantial performance.
Schedule a Free, Confidential Consultation with a Cortland, OH Business Lawyer
At The Law Office of John C. Grundy, our Ohio business attorney is a highly-skilled, diligent advocate for business owners and entrepreneurs. If you have any questions about substantial performance of a contract, we are ready to help. Contact us today to set up a free, completely confidential initial consultation. From our legal office in Cortland, we handle contract disputes throughout Northeast Ohio, including in Trumbull County, Mahoning County, Columbiana County, and Summit County.