performance of contracts

When parties enter a legally binding contract, each party is entitled to expect performance of the obligations which have been agreed. This is the purpose of legally binding agreements. Performance of a contract is the doing of the acts or acts of doing which are required by the contract (or refraining from doing specified acts in the case of restrictive covenants) in accordance with its express and implied terms, such as warranties implied by statute, the Sale of Goods Act 1979, Supply of Goods and Services Act 1982 and related legislation.

Contractual Obligations

The law of contract is a well establish area of law with developed legal principles which are of general application to performance of contracts of many kinds and types, regardless of their subject matter.

Performance

Performance of a contract:

1. by both parties results in the contract being discharged in its entirety;
2. by one party discharges that party from further obligation to perform its obligations;
3. by a supplier gives rise to the right to be paid, subject to the terms of the contract (such as a requirement for the customer to tender payment in advance);
4. which is partial in respect of an entire agreement does not entitle the supplier to be paid;
5. in a divisible contract, the obligations of the contracting party are independent of the other party’s obligations to perform. Accordingly, one party can demand performance without performing themselves, subject to the terms of the agreement. For instance, a contract may require payment of payment for services. If the supplier is in breach of the contact, he still may be required to be paid;
6. in the case of an entire agreement, neither party is may demand that the other perform unless they themselves have performed or are ready, willing and able to perform the contract;
7. must be complete and precisely in accordance with the terms of the contract at common law in order to be paid. Substantial performance permits a party to be paid for contract works subject to deductions for defective work;
8. or non-performance which results in breach of a condition of contract and is a repudiatory breach, entitles the innocent party to:
   1. terminate the contract for that repudiatory breach or affirming the contract, regardless of that choice;
   2. sue for damages for the breach of contract;
9. which is not in accordance with its terms and is not a repudiatory breach, is a breach of warranty, and entitles the innocent party to claim damages but not terminate the contract;
10. is completed by a party tendering performance, that is, where the party required to perform, offers to perform in accordance with the agreement but is denied the ability to perform by the other party;
11. may be completed vicariously by another person, such as subcontractor subject to a personal obligation to perform specified by the contract. The contracting party remains vicariously liable for the performance of the subcontractor.

Our solicitors advise on the application of principles of UK contract law to business contracts.