Also known as:substantially perform · substantially performed · substantially performing · substantial performances · substantial compliance
Written by attorneys — see sources below.
A doctrine under which a party who has performed the essential terms of an agreement though not every detail may recover on the contract subject to damages for any deficiencies. The breach is treated as nonmaterial so the nonbreaching party cannot rescind but is limited to compensation for the shortfall.
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How its tested
Common Examples
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Lease Validation Through Conduct
Brook Connect and Bright Satellite executed an unsigned ten-year equipment-room agreement. Bright Satellite installed towers and cabling while Brook Connect accepted quarterly rent payments matching the discussed terms. These actions constituted substantial performances clearly referable to the lease. The lease was therefore given full effect despite the missing writing.
Trust Revocation by Conduct
The settlor attempted to revoke a revocable trust by delivering a signed writing that omitted one required formality listed in the trust instrument. The trustee received the writing and immediately notified the other beneficiaries. The settlor's delivery and the trustee's prompt notice amounted to substantial performance of the revocation method. The revocation therefore took effect.
The donee of a power of appointment executed a will that failed to make the exact reference to the power required by the donor. The donee had known of the power and intended to exercise it. The omission did not impair any material purpose of the donor. The appointment was therefore valid under substantial performance of the formal requirements.
Academic Contract Performance
A student completed nearly all course requirements at Salve Regina College but fell short on one administrative obligation. The college argued the strict commercial doctrine of substantial performance did not apply in the academic setting. The court treated the student's overall performance as substantial. The student could therefore pursue the breach-of-contract claim.
Salve Regina College v. Russell499 U.S. 225, 238 (1991)
Salve Regina College is an institution of higher education located in Newport, Rhode Island. Sharon L. Russell was admitted to the college and began her studies as a freshman in 1982. The following year, Russell sought admission to the college’s nursing department to pursue a bachelor of science degree in nursing. She was accepted by the department and began her nursing studies in the fall of 1983.
Russell was five feet six inches tall and weighed in excess of 300 pounds when she was accepted in the nursing program. Her weight became a topic of commentary and concern by officials of the nursing program immediately after the 1983 school year began. Her first year in the program was marked by a series of confrontations and negotiations concerning her obesity and its effect upon her ability to complete the clinical requirements safely and satisfactorily.
During her junior year, Russell signed a document that was designated as a contract. The contract conditioned her further participation in the nursing program upon weekly attendance at a weight-loss seminar and a realized average loss of two pounds per week. When she failed to meet these commitments, she was asked to withdraw from the program and did so.
Russell transferred to a nursing program at another college but had to repeat her junior year in order to satisfy the transferee institution’s two-year residency requirement. She also underwent surgery for her obesity. In 1987, Russell successfully completed her nursing education and is now a registered nurse.
Soon after leaving Salve Regina College, Russell filed this civil action in the United States District Court for the District of Rhode Island. She asserted claims based on intentional infliction of emotional distress, invasion of privacy, and nonperformance by the college of its implied agreement to educate her. Subject-matter jurisdiction in the District Court was based on diversity of citizenship. The parties agree that the law of Rhode Island applies to all substantive aspects of the action.
At the close of plaintiff-respondent’s case in chief, the District Court directed a verdict for the individual defendants on all three of the remaining claims and for the college on the claims for intentional infliction of emotional distress and invasion of privacy. The court denied the college’s motion for a directed verdict on the breach-of-contract claim.
At the close of all the evidence, the college renewed its motion for a directed verdict on the contract claim. The District Court denied the motion and submitted the breach-of-contract claim to the jury. The jury returned a verdict for Russell and determined that the damages were $30,513.40. Judgment was entered.
The United States Court of Appeals for the First Circuit affirmed the judgment. The Supreme Court granted certiorari to resolve the conflict among the circuits concerning the appropriate standard of appellate review.
Jacob & Youngs installed plumbing pipe that matched the contract specifications in quality and function but came from a different manufacturer than the Reading brand required. The owner refused to pay the final installment. The court held the contractor had substantially performed. Recovery on the contract was allowed with an offset for any diminution in value.
Jacob & Youngs v. Kent230 N.Y. 239, 129 N.E. 889 (1921)
Jacob & Youngs built a country residence for Kent at a cost of upwards of $77,000 and sued to recover a balance of $3,483.46 remaining unpaid. The work of construction ceased in June, 1914, and Kent then began to occupy the dwelling. There was no complaint of defective performance until March, 1915.
One of the specifications for the plumbing work provided that all wrought iron pipe must be well, galvanized, lap welded pipe of the grade known as standard pipe of Reading manufacture. Kent learned in March, 1915, that some of the pipe, instead of being made in Reading, was the product of other factories. The architect directed the plaintiff to do the work anew. The plumbing was encased within the walls except in a few places where it had to be exposed. Obedience to the order would have meant the demolition at great expense of substantial parts of the completed structure. The plaintiff left the work untouched and asked for a certificate that the final payment was due. Refusal of the certificate was followed by this suit.
The evidence showed that the omission of the prescribed brand of pipe was neither fraudulent nor willful but the result of the oversight and inattention of the plaintiff’s subcontractor. Reading pipe is distinguished from other brands only by the name of the manufacturer stamped upon it at intervals of between six and seven feet. Even the defendant’s architect failed to notice the discrepancy upon inspection. The plaintiff tried to show that the brands installed were the same in quality, in appearance, in market value and in cost as the brand stated in the contract. This evidence was excluded, and a verdict was directed for the defendant. The Appellate Division reversed and granted a new trial.
First National Realty leased apartments that violated the housing code in several respects. Tenants withheld rent and the landlord sought possession. The court examined whether the landlord's failure to repair constituted a material breach. Because the defects were not shown to have prevented substantial performance of the lease the landlord could not terminate.
Javins v. First National Realty Corp.428 F.2d 1071 (D.C. Cir.), cert. denied, 400 U.S. 925 (1970)
Several tenants rented apartments in Clifton Terrace, a three-building apartment complex in Northwest Washington, by separate written leases with First National Realty Corporation. On April 8, 1968, the landlord filed separate actions in the Landlord and Tenant Branch of the Court of General Sessions seeking possession on the ground that each tenant had defaulted in the payment of rent due for the month of April. The tenants admitted that they had not paid the landlord any rent for April but alleged numerous violations of the Housing Regulations as an equitable defense or claim by way of recoupment or set-off.
The tenants offered to prove that there are approximately 1500 violations of the Housing Regulations of the District of Columbia in the building at Clifton Terrace, where the defendant resides, some affecting the premises of the defendant directly, others indirectly, and all tending to establish a course of conduct of violation of the Housing Regulations to the damage of defendants. They conceded at trial that this offer of proof reached only violations which had arisen since the term of the lease had commenced. The Court of General Sessions refused the offer of proof and entered judgment for the landlord.
The District of Columbia Court of Appeals affirmed, rejecting the argument that the landlord was under a contractual duty to maintain the premises in compliance with the Housing Regulations. Because of the importance of the question presented, the United States Court of Appeals for the District of Columbia Circuit granted the tenants' petitions for leave to appeal.
How does substantial performance differ from full performance?
Substantial performance is a nonmaterial breach that still allows recovery on the contract minus damages for deficiencies. Full performance leaves no breach and entitles the performing party to the full contract price without offset.
When does substantial performance excuse a condition?
Substantial performance of one party's promise excuses the other party's duty to perform a return promise that was conditioned on complete performance. The nonbreaching party remains liable for damages but cannot treat the contract as terminated.
Does substantial performance apply to sales of goods?
No. Article 2 of the UCC follows the perfect tender rule rather than substantial performance. A buyer may reject goods that fail to conform in any respect unless the seller cures within the contract time.
What factors determine whether performance is substantial?
Courts weigh the quantity and quality of performance, the willfulness of the deviation, the extent to which the nonbreaching party receives the expected benefit, and whether the cost of full compliance is grossly disproportionate to the benefit obtained.
…creates privately enforceable duties as held in Whetzel , but that the basic validity of every housing contract depends upon substantial compliance with the housing code at the beginning of the lease term. The Brown court relied particularly upon Section 2501 of the Regulations which provides: “Every premises accommodating one or…