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Substantive performance in contract law means that a contract has been completed to an adequate extent, allowing the party who fulfilled most of their responsibilities to receive payment. This doctrine protects parties who were unable to perform exact obligations due to circumstances beyond their control. It is the opposite of the perfect supply doctrine, where obligations must be completed exactly as specified. The burden of proof is on the party claiming material performance, and the other party can try to prove damages to reduce payment.
Substantive performance is a term used in contract law that indicates that the contract has been completed or performed to an extent that performance should be considered adequate. It arose out of common law contractual concepts, which were put in place to ensure that if a contract was nearly fully performed, the absence of completion of small or insignificant details would not grant a party license to breach a contract. In other words, if a person fulfills most or all of his responsibilities under a contract, he is entitled to payment or whatever else has been promised to him under the terms of the contract.
Contracts are legally binding promises. Contracts may contain numerous terms or conditions that the parties to the contract must meet. Some of the provisions of a contract can be time consuming and can take years to complete.
Under the substantial performance doctrine, when one party completes the contract such that performance is substantially equal to full performance, the other party is required to pay. In other words, if, for example, a contractor is required to complete a contract using one type of wood but the wood is not available and so he uses an equivalent wood, the substantial performance will protect him. It allows the contractor to enforce the contract and demand payment, even though he has not performed the functions listed in the contract to the exact specifications listed in the contract.
In order for a contract to be performed when there is substantial performance but not complete performance of all contractual obligations, the party requiring substantial performance must have been unable to perform the exact obligations of the contract through no fault of his own. This means that a party can’t just decide to perform differently and expect substantial performances. Something beyond his control must have made it necessary for him to make a change.
Substantive performance is the opposite doctrine of the perfect supply doctrine. In contracts requiring a perfect bid, contractual obligations must be completed exactly as specified. Even if the result of one party’s performance is substantially the same, in a perfect tender contract, that party will be in default and not entitled to payment.
When a party wants to perform a contract under the doctrine of material performance, it has the burden of proof. If it can demonstrate that its way of fulfilling the contractual duties was so similar as to be almost equivalent to the original duties, it is entitled to collect the full contract payment. The other party can then try to prove that they have suffered damage as a result of the change and the amount of payment that this party has to make is reduced by any damage they prove.
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