LEGAL PERSPECTIVE: Performance and Breach of Contracts by Dr AbdelGadir Warsama Ghalib, Legal Counsel, Bahrain

Dr AbdelGadir Warsama Ghalib, Legal Counsel, Bahrain

Promisor is obliged to perform as promised, however, performance may range from perfection to no performance at all. This issue could arise now due to Coronavirus. In attempting to solve the problems relative to the performance of contractual obligations, Courts have attempted to set up practical workable standards. Generally, Courts recognize three degrees of performance. That is, complete or satisfactory performance, substantial performance and material breach.

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Some contracts can be completely performed such as payment of fixed money, whereas, construction of a road cannot be performed without slight deviation from perfection. The standard set up by Courts to measure “degree of perfection” of performance, to which a promisee is entitled, is the test of “reasonable expectation”. Each promisee is entitled to that “degree of perfection” which is standard for the type of obligation owed by promisor.

Substantial performance is a “degree of perfection” of performance, which is slightly below that of complete or satisfactory performance. If promisor made an honest effort to perform but, due to lack of ability or reasons beyond control, had deviated in slight degree from accepted standards and if, in addition, the consideration given to promisee is such that it can’t be returned. Herein, mostly, Courts will hold that promisor has substantially performed the contract. Promisor will, as a general rule, be entitled to the contract price less any damage suffered by the promisee due defective performance.

Promisor will be accountable of a material breach of contract if his performance fails to reach that degree of perfection which promisee is expecting under the circumstances. If promisor breached, he has no right of action on the contract, unless promisee accepted the defective performance without objection. If defective performance is tendered, and the circumstances are such that promisee can reject the tender, he has the right to do so. If performance is defective to such a degree that it amounts to a material breach but the circumstances are such that it is impractical for promisee to reject the defective performance, promisor may be able to take an action to recover benefits conferred on promisee. If performance is complete or satisfactory, promisor is entitled to the contract price, if substantial, promisor is entitled to contract price less damage resulting from defects. If he committed material breach, he can’t recover the contract but may be entitled to some recovery, in case some performance proved.

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