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Substantial Performance

Substantial performance occurs when a contractor has completed the essential aspects of a contract but minor deficiencies remain. To determine if substantial performance has occurred, courts examine the degree of completion, the nature and cost of remedying any defects, and whether the defects prevent the work from functioning as intended. If substantial performance has taken place, the contractor is entitled to payment minus deductions for remedying deficiencies, but cannot be denied full payment for minor defects alone.

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Syazana Jamal
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99 views

Substantial Performance

Substantial performance occurs when a contractor has completed the essential aspects of a contract but minor deficiencies remain. To determine if substantial performance has occurred, courts examine the degree of completion, the nature and cost of remedying any defects, and whether the defects prevent the work from functioning as intended. If substantial performance has taken place, the contractor is entitled to payment minus deductions for remedying deficiencies, but cannot be denied full payment for minor defects alone.

Uploaded by

Syazana Jamal
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Substantial performance

i. The contractor has completed the erection of the buildings, there has been
substantial performance and the other party cannot refuse all payment merely
because the work is not in exact accordance with the contract.
(H Dakin & Co Ltd v Lee [1916] 1 KB 566 ; Eshelby v Federated European Bank
Ltd [1932] 1 KB 423.

ii. Simpson Steel Structures v Spencer [1964] WAR 101


“What amounts to substantial performance is a question of degree in each case,
and little guidance can be obtained from the decided cases”

iii. H Dakin & Co Ltd v Lee [1916] 1 KB 566


"What the plaintiffs have done is to perform the work which they had contracted
to do, but they have done some part of it insufficiently and badly; and that does
not disentitle them to be paid, but it does entitle the defendant to deduct such an
amount as is sufficient to put that insufficiently done work into the condition in
which it ought to have been according to the contract."

iv. Bolton v Mahadeva [1972] 2 All ER 1322


“In considering whether there was substantial performance I am of opinion that it
is relevant to take into account both the nature of the defects and the proportion
between the cost of rectifying them and the contract price. It would be wrong to
say that the contractor is only entitled to payment if the defects are so trifling as to
be covered by the de minimis rule” (probably can argue that the defects are
serious and as such, the contractor is not entitled for the payment)
“The contract was to install a central heating system. If a central heating system
when installed is such as that it does not heat the house adequately and is such,
further, that fumes are given out, so as to make living rooms uncomfortable, and if
the putting right of those defects is not something which can be done by some
slight amendment of the system, then I think that the contract is not substantially
performed."

v. H. Dakin & Co Ltd v Lee [1916] 1 KB 566


There were deficiencies in the work which the contractor did in respect of
concrete footings, steel columns and steel joints, which the Court of Appeal
regarded as trivial and attributable to bad workmanship rather than omissions on
the part of the contractor, and it was held that the contractor was entitled to the
contract price, less so much as ought to be allowed in respect of such of the items
as to which it was found there had been a defect on the part of the contractor.

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