Contracts and Sales Multistate Bar Practice Exam

What occurs when a party has substantially performed their contractual duties?

1. The other party is released from performance

2. The other party's duty becomes absolute

3. All contractual obligations are void

4. The substantial performance is the same as perfect performance

The correct answer is: The other party's duty becomes absolute

When a party has substantially performed their contractual duties, this means that they have completed enough of their obligations under the contract that the fundamental purpose of the contract has been achieved. In such cases, the non-breaching party is usually still required to fulfill their obligations under the contract, although they may have a right to recover damages for any minor deficiencies in the performance. Therefore, the other party's duty becomes absolute, meaning they are obligated to perform as stipulated in the contract, despite the minor deviations from perfect performance. This understanding stems from the principle of substantial performance, which recognizes that while the performance might not be perfect, its completion allows the contract to stand. In contrast, if the performance were deemed insufficient or a complete failure, the other party might be able to excuse their own performance. However, since substantial performance is recognized, the expectation is that the contractual relationship continues, with obligations remaining intact.