Understanding its Application and Exceptions

Perfect performance rule implies that performance must match exactly with the laid down requirements in a contract. In this regard, in an instance where the first party does not perform entirely, then the other party ought not to pay anything at all even when the shortfall in performance does not cause any hardship. Notably, this rule allows parties wishing to escape from engaging in an unprofitable arrangement (contract) to do so whilst taking full advantage of the minor departures from the terms of the rule. This rule was exercised in the case of Cutter v Powell, where the court held that in an instance where a contract needs entire performance and a party fails in performing the contract in entirety, then he/she should not be entitled to anything under the other party’s contract. However, there are exceptions to the doctrine of this rule, which aid in mitigating its harshness. The exceptions are as provided below:

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Substantial performance

This exception exists in an instance where the court is satisfied that there is the presence of substantial performance. In this regard, the court may award price that is contractually agreed and deduct sums, in order to reflect on the amount that has not been performed. However, in an instance where the performance is not considered to amount to a given substantial performance, then the claimant is not entitled to anything. There is no specific limit that is set down to amount to substantial performance, as it ought to be determined, based on the facts of an individual case. Substantial performance was noted in the case of Bolton v Mahadeva, whereby, the court held that the prices of the defects used in installing the heater was too much, and as such, it could not be held that there was substantial performance. Moreover, in the case of Hoenig v Isaacs, the court held that the cost of repairing a flat decoration did not have much equation. As such, the defendant was obligated to pay the amount of the decoration that remained, less the repairing costs of the defective work.

Severable/divisible contracts

This exception requires that when there is a possibility of dividing a contract into parts (separate) for instance, if the agreement is that a sum is payable weekly or hourly, then the court is able to award a sum for the contract’s separate parts that have been completed. This exception was witnessed in the case of Marconi Systems v BHP Information Technology, where the court held that the cost of each stage could be claimed when that given stage has been completed even in an instance where the concerned party may be breaching the contract of not having completed the subsequent stages.

Acceptance of partial performance

This exception is where one party accepts partial performance whilst the involved sum is payable for the completed work. This exception has its major focus based on free acceptance. Notably, this exception was witnessed in the case of Sumpter v Hedges, the builder accepted to construct 2 houses, as well as a stable on the land of the defendant. Unfortunately, he abandoned the work upon completing part of the job. In this regard, the defendant completed the entire job himself, using the materials that the builder had left

behind. Notably, the builder claimed the quantum meruit of amount of work that had been done as well as the supplied materials. However, the claim that the defendant made for the work failed, owing to the fact that the defendant did not choose to accept the performance partly and thus, finish the entire work himself. However, it is clear that he was not supposed to use the left materials and as such, the builder has the right to make a claim for them. Similar to this, is the case of Steele v Tardiani, where the deficient performance (the wood that had not been cut to correct length) occurred. This happened in the currency of the said performance. In this case, had the defendant protested the incorrect job initially, it is clear that the outcome could have been different

De minimus non-curat lex rule

This exception merely implies that the general law is not concerned with trivialities. Notably, this exception was witnessed in the case of Margonaronis Navigation Agency v Henry W Peabody & Co of London, where it was stated that the court cannot give regard to any matter that is trivial concerned, or rather, a matter that is trifling in nature and given regards to performance within a contract. Similar to this, is the case involving Attorney-General (Botswana) v Aussie Diamond Products, where it was stated that whether a contract breach fell under the rule of de minimus, it ought to depend on the extent, as well as the details of the breach, plus the term that is breached. This is considered the determination, in construction, which denotes the parties’ intentions.

This exception requires that in an instance where performance has taken place within the specified time, then the contract is regarded to have been discharged accordingly. However, if the performance occurs too late, then it is regarded that there is a breach of contract. This exception was witnessed in the case of Reid v Moreland Timber Co P/L, where the court held that the performance implication within a reasonable time should be made, unless in an instance where there are particular indications that are to the contrary. Similar to this case, was the case of Handley v Gunner, where the court held that a reasonable time should be determined by the significant circumstances that exist at the time the performance is taking place, or when the performance should have taken place and not the time prescribed of the contract. Also similar to the two mentioned cases, is the case of Peregrine Systems Ltd v Steria Ltd, where it involved considerations, having hindsight as a significant benefit and it is perceived from the time that one party states the reasonable time needed for a performance has exceeded already.

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Bibliography

Cases

Attorney-General (Botswana) v Aussie Diamond Products P/L (No 3) (2010) WASC 141 @ 214

Bolton v Mahadeva [1972] 1 WLR 1009

Cutter v Powell [1795] EWHC KB J13

Handley v Gunner (2008) NSWCA 113

Hoenig v Isaacs [1952] 2 All ER 176

Marconi Systems v BHP Information Technology [2003] FCA 50

Margonaronis Navigation Agency v Henry W Peabody & Co of London (1962) 2 QB 430 @ 444

Peregrine Systems Ltd v Steria Ltd (2005) EWCA Civ 239

Reid v Moreland Timber Co P/L (1946) 73 CLR 1 @ 13

Steele v Tardiani (1946) 72 CLR 386

Sumpter v Hedges (1898) 1 QB 673

Books/ Journals

Andrews, N. (2015). Contract law. Cambridge University Press.

Beale, H., Fauvarque-Cosson, B., Rutgers, J., & Vogenauer, S. (2019). Cases, materials and text on contract law. Bloomsbury Publishing.

Murray Jr, J. E., & Murray, T. (2018). Corbin on Contracts Desk Edition. LexisNexis.

Pargendler, M. (2018). The role of the state in contract law: The common-civil law divide. Yale J. Int'l L., 43, 143.

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