Business Law: Case Study

Introduction

A friend was contracted by a businessman to paint his house. The agreement was that he should use green paint to paint the face of the shop. However, the friend used a color similar to green and the businessman refused to pay him. A question arose as to whether this amount to substantial performance or it amounts to inferior performance.

The writer feels that this amounts to substantial performance and not inferior performance since the other parts painted were in accordance with the agreement. The only problem was with the paint used on the front of the shop and this amounts to substantial performance. The businessman was not therefore right to deny the contractor his payments (Liuzzo & Bonnice, 2007).

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In this paper, the differences between inferior performance and substantial performance will be addressed. The paper will also look at the rights available to the non-breaching party in the case of substantial performance and inferior performance in order to substantiate the position taken on the issue. An overview of the elements of a contract will also be provided.

Analysis

There are six elements of an enforceable contract. For a contract to be enforceable, there must be an offer and acceptance, the contracting parties must be legally competent to enter into a contract, there must be consideration, there should be free consent of the contracting parties, the contract must be legal in nature and the contract should have the intention of creating a legal relationship (Young, 2010). If a contract has all the above elements, it is considered to be a valid contract enforceable in a court of law.

There are differences between substantial performance and inferior performance in contract law. Inferior performance is defined as a material breach of a contract and it happens when one party does not fulfill his contractual obligations. The remedies available for the non-breaching party are to rescind the contract and seek restitution from the breaching party (Young, 2010).

On the other hand, substantial performance means that even if the performance is not equal to the contractual obligations, it is so near that denying the contractor payment will be unreasonable. The remedies available for substantial performance are seeking an order for specific performance and claiming damages (Liuzzo & Bonnice, 2007).

The non-breaching party in the case of inferior performance or substantial performance has the right to withhold payment of the consideration until the work is completed. He also has the right to sue the breaching party for breach of contract and also the right to avoid future obligations arising out of the contract.

According to the provisions of contract law, the non-breaching party has several options in case of substantial performance and inferior performance. The non-breaching party can claim for damages, can seek court order of specific performance by the breaching party, can rescind or annul the contract and can also seek restitution.

The non-breaching party is excused from any other performance arising out of the contract. Another remedy available to the non-breaching party is to claim for consequential damages arising out of the substantial performance or inferior performance (Young, 2010).

The non-breaching party is advised to seek legal redress once it becomes evident that the other party has performed substantial work or inferior work. This can be in the course of the work or after the other party has completed the work. Legal address should be sought after efforts reach to an agreement with the other party about the quality of the work has failed (Young, 2010).

Conclusion

According to the analysis, it is clear that the business man was wrong in denying the painter his full compensation for the work done. There is breach of contract and this amounts to substantial performance since the work done is almost equivalent to the work which the painter had been contracted to do.

The business man should therefore claim for damages or seek an order for specific performance. The business man also has the option of claiming for damages or claiming for consequential damages arising out of the substantial work. Failing to pay the painter is not among his options since there is substantial performance and not inferior performance (Liuzzo & Bonnice, 2007).

References

Liuzzo, A. & Bonnice, J. (2007). Essentials of business law. 6 Edn. New York, NY: McGraw-Hill/Irwin.

Young, M. (2010).Contract law: The basics. London: Taylor & Francis Publishers.