An Introduction to Performance and Breach

• Author: Franklin G. Snyder, Mark Edwin Burge
• Pages: 424-425

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424 CHAPTER VII: PERFORMANCE AND BREACH

An Introduction to

PERFORMANCE AND BREACH

Assume now (1) that we have a valid contract, (2) that no defenses prevent the

contract’s enforcement, and (3) that we know exactly what the contract says and

means. The next question a lawyer must be able to answer in a potential contract

dispute is whether one or more of the parties has breached the contract. Any failure

to do what a party has promised to do is a breach. Given the almost limitless number

of potential terms to which parties can agree, the question of whether the party did

what it was obligated to do will usually be highly fact-intensive.

All Breaches Aren’t Created Equal? Finding that a party did not do what it

was supposed to do does not end the inquiry. Every breach of contract entitles the

non-breaching party to claim damages or some other remedy. But often the non-

breaching party does not want to sue for damages, but it instead wants to cancel the

contract. As you will see from the materials in this chapter, not all breaches allow the

aggrieved party to do that. Determining whether a particular failure to perform will

allow the other party to cancel the contract depends on the standard of performance

we use to decide the question. American contract law sometimes allows a party to

cancel the agreement no matter how small or unimportant the breach is, a standard

that lawyers call perfect tender. But contract law also sometimes requires parties to

accept and pay for a performance that is not exactly what was bargained for, a

standard called substantial performance.

When Is Close Good Enough? An example may help to understand this

distinction. You may recall the famous court case in Shakespeare’s Merchant of

Venice where the court holds that Shylock is entitled to take a “pound of flesh” from

Antonio.

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But he would, as Portia points out, breach the agreement himself if he took

more or less than a pound. Does he have to remove exactly a pound—that is, 453.592

grams—or is there some amount of leeway? If he takes one pound “more or less,” has

he breached in a way that would allow Antonio to back out of the deal? Or would he

just be liable for the additional damage caused by the additional flesh taken? These

two standards and the rules for how they work and when they are used are the subject

of the next unit.

Excuses, Excuses. Even when a party fails to perform substantially (or even

at all), it still may not be liable for breach of contract. How can this happen? In some

situations, the law will excuse a party who failed to perform. The second unit in this

chapter, covering contract excuses, deals with exactly this situation. You will be

introduced to doctrines known as “commercial impracticability” and “frustration of

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By this point, we hope you realize—e ven without reading the chapter on Remedies—

that a co ntract permitting extraction of a pound of flesh in the event of a breach would be void as a

matter of public policy. You did realize that, didn’t you?