law-substantial performance doctrine in contract disputes and breach of contract context


The substantial performance doctrine originated and is still mostly used in the context of
construction contracts. See Vance v. My Apartment Steak House, Inc., 677 S.W.2d 480, 482 (Tex.
1984); Turner, Collie & Braden, Inc. v. Brookhollow, Inc., 642 S.W.2d 160, 164 (Tex. 1982); RAJ
Partners, Ltd. v. Darco Constr. Corp., 217 S.W.3d 638, 643 (Tex. App.-Amarillo 2006, no pet.);
Beard Family P'ship v. Commercial Indem. Ins. Co., 116 S.W.3d 839, 844 (Tex. App.-Austin 2003,
no pet.). But the doctrine has also been expanded to other types of contracts. See, e.g., E.P.
Towne Ctr. Partners, L.P. v. Chopsticks, Inc., 242 S.W.3d 117, 124-25 (Tex. App.-El Paso 2007, no
pet.) (applied to settlement agreement); Geotech Energy Corp. v. Gulf States Telecomms. & Info.
Sys. Inc., 788 S.W.2d 386, 390 (Tex. App.-Houston [14th Dist.] 1990, no writ) (applied to contract
for sale and installation of telephone system); Continental Dredging, Inc. v. De-Kaizered, Inc., 120 S.
W.3d 380, 394 (Tex. App.-Texarkana 2003, pet. denied) (applied to contract for dredging services).
Substantial performance is defined as "performance of the primary, necessary terms of an
agreement." Black's Law Dictionary 1252 (9th ed. 2009). The doctrine of substantial performance is
not available to a party when that party has made a willful departure from the terms of an
agreement or omitted essential points of a project. See E.P. Towne, 242 S.W.3d at 125; Smith v.
Smith, 112 S.W.3d 275, 279 (Tex. App.-Corpus Christi 2003, pet. denied).

To prove an action for breach of contract, a plaintiff must establish it performed, tendered
performance of, or was excused from performing its contractual obligations. Carr v. Norstok Bldg
Sys., Inc., 767 S.W.2d 936, 939 (Tex. App.—Beaumont 1989, no writ); Acme Pest Control Co. v.
Youngman, 216 S.W.2d 259, 263 (Tex. Civ. App.—Waco 1948, no writ).

Substantial performance" is the legal equivalent to full performance and means that the
essential elements or provisions of a contract have been performed. Anderson v. Vinson
Exploration, 832 S.W.2d 657, 666 (Tex. App.—El Paso 1992, writ denied); CraneTex, Inc. v.
Precision Crane & Rigging of Houston, Inc., 760 S.W.2d 298 (Tex. App.—Texarkana 1988, writ
denied). This is not the same as being excused from performing under the contract. When one
party to a contract commits a material breach of that contract, the other party is discharged or
excused from further performance. Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195,
196 (Tex. 2004).

The doctrine of substantial performance only excuses contractual deviations or deficiencies which
do not severely impair the purpose underlying the contractual provision. Burtch v. Burtch, 972 S.W.
2d 882, 889 (Tex. App.—Austin 1998, no pet.).

For example, the doctrine allows a contractor who substantially performed a contract to sue on the
contract rather than being limited to a
cause of action for quantum meruit. Vance v. My Apartment
Steak House, Inc., 677 S.W.2d 480, 482 (Tex. 1984). When a contractor substantially performs a
building contract, he is entitled to recover the full contract price less the cost of remedying those
defects that are remediable. Vance, 677 S.W.2d at 481; Atkinson v. Jackson Bros., 270 S.W. 848,
850 (Tex. Comm'n App. 1925, holding approved); Dietz Memorial Co. v. Texas Steel Bldg. Co., 578
S.W.2d 872, 875 (Tex. Civ. App.—Waco 1979, writ ref'd n.r.e.). Thus, when a breaching contractor
brings suit to recover for his substantial performance and the owner alleges remediable defects in
the construction, the contractor is required to prove 1) that he did substantially perform, 2) the
consideration due him under the contract, and 3) the cost of remedying the defects due to his
errors or omissions. Vance v. My Apartment Steak House, Inc., 677 S.W.2d 480, 483 (Tex. 1984).



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