American Contract Law for a Global Age, 2017a

Unit 21
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PERFORMANCE AND BREACH
Part One
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Standards of Contract Performance
FOCUS OF THIS UNIT
When Does Breach Occur? Assume that two parties are in a valid contract,
but one party now believes the other has breached the contract. How does a lawyer
tell when a contract has been breached? Determining whether a breach has occurred
requires a standard for what it means to perform. Put another way, a legal system
could have a rule that says that to comply with a contract means one must do exactly
what one promised to do, without any deviation whatsoever. On the other hand, a
legal system could have a rule in which doing pretty much what one promised to do—
getting close enough—is sufficient.
Perfect Tender. As it happens, contract law uses both of those rules. The first
is called, in modern legal parlance, the “perfect tender” rule. If a party’s tender of
performance fails in any way to meet the contract requirements, the party cannot
recover under the contract. 1 Over the years this first approach tended to develop
among merchants engaged in trade, where courts tended to put weight on the
expertise of business people and tended to give them credit for saying exactly what
they meant. In the words of a well-known British judge, in commercial transactions
there is “no room” for things that “are almost the same, or which will do just as well.”
Substantial Performance. Side by side with this, however, was an approach
that allowed for at least a little flexibility, especially in situations like construction
where some deviations from almost inevitable. Thus, in cases like Glacius v. Black,
50 N.Y. 145 (1872), it was held that “mere technical, inadvertent or unimportant
omissions or defects” would not amount to a breach that would allow the other party
to back out of the transaction. What counts as “technical, inadvertent or
unimportant,” however, was a matter of some dispute, and can be so today. This
approach is typically known as the “substantial performance” doctrine. The modern
American common law of contracts frequently follows the substantial performance
1 [Although, as we will see later when we get to damages for breach, there are alternative
theories on which a party that has not performed perfectly can still recover something. —Eds.]
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UNIT 21: STANDARDS OF CONTRACT PERFORMANCE 427