Complete: Performance to the letter of the contract, results in the parties being satisfied and thus having no claims against the other. Example: vendor sells washing machine for $800. Customer pays the money and takes the delivery fo the washing machine and satisfied with product performance.Substantial performance: If performance is not complete, however, a question arises as to whether it satisfies the contract. Performance that is not complete but that provides the other party with the important and essential benefits of the contract is “substantial performance.
Example: A utility contractor installs brand Y instead of brand X iron pipe. Brand X was required in the contract specifications. Despite the fact that both brand X and Y iron pipe function equally well, the contractor has nevertheless breached its contract by failing to comply with the material specifications of the contract. In this example, the utility contractor’s breach is a “Substantial performance” of the contract, and the owner’s remedy would be to recover damages it suffered.Breach: absolute failure to perform material contract term. Anything less than substantial performance is a material breach of contract.The legal ramifications for one or more of these types of performances are:Compensatory Damages—compensate an injured party for injuries or damages actually sustained by the party.
The injured party must prove that the actual damages arose directly by the breach of contract.Consequential Damages—are foreseeable damages that result from a party’s breach of contract. Consequential damages are caused by special circumstances beyond the contract itself.Punitive Damages—are designed to punish the wrongdoer and set an example to deter similar conduct in the future and are not usually recoverable in an action for breach of contract.Nominal Damages—are awarded to an innocent party when only a technical injury is involved and no actual damage has been suffered. Nominal damages are often small but are awarded to establish that the defendant acted wrongfully.In most situations, when a breach of contract occurs, the injured party is held to a duty to mitigate or reduce the damages that he or she suffers.
In case, one party performs completely but the other party performs only substantially, the first party’s remedy would be to recover damages it suffered because it did not receive the full “benefit of its bargain”.