Contracts and Sales Multistate Bar Practice Exam

Which definition is correct for 'substantial performance' in contract law?

1. Performance that meets all contract specifications

2. Performance that deviates slightly but fulfills essential obligations

3. Performance that is less than 75% complete

4. Failure to perform any agreed terms

The correct answer is: Performance that deviates slightly but fulfills essential obligations

Substantial performance refers to a standard in contract law where a party has completed enough of the contract terms that the essential purpose of the agreement has been fulfilled, despite some minor deviations from the contractual specifications. It means that the party has performed the major obligations of the contract but may have left some details unfulfilled or may not have adhered perfectly to every specification. This standard allows for flexibility in contract enforcement and acknowledges that perfect performance is often unrealistic or impractical. When this level of performance is achieved, the performing party is generally entitled to payment, albeit possibly subject to deductions for any defects or unmet specifications. In contrast, the other definitions do not accurately capture the essence of substantial performance. Meeting all contract specifications would signify complete performance, while stating performance is less than 75% complete or indicating a failure to perform any agreed terms would not qualify as substantial performance at all. Thus, the chosen definition aligns well with the established legal principles surrounding contractual obligations and performance standards.