If you are a party to a contract that is breached, you may want to take action to enforce your rights. However, if some of the contractual obligations have been fulfilled, you need to ensure you do not inadvertently harm your case. Part performance in contract law is complex, and there is a risk that you could take action which legally accepts the changes. If you then attempt to end the contract, you could be in breach of the contract terms.
Summary
This article includes:
- What constitutes part performance of a contract?
- Examples of part performance of a contract
Oral contract formation
Acts done by a party indicating the agreement - Requirements for part performance of a contract
- What are the remedies for part performance of a contract?
What Constitutes Part Performance of a Contract?
Part performance occurs when a significant part of the contract is carried out. For an action to constitute part performance, it must be significant. Failure to fully carry out the obligations could be the fault of either party. One party might not provide the complete service or goods agreed upon. Alternatively, the other party might prevent the first party from completing the contract, for example, by refusing to accept goods or by preventing them from carrying out work.
Examples of Part Performance of a Contract
An example of part performance is where a builder does a significant amount of work as agreed, but fails to finish, or a portion of an order is delivered, but not the entirety of what was agreed.
In the case of Mason v Clarke [1955], an oral agreement was made between a tenant and landowner, granting the landowner the right to hunt rabbits on the land. The landowner hunted on the land, and this amounted to part performance of the contract. This entitled him to damages for trespass when his rights were obstructed, and he was prevented from hunting. An injunction was granted preventing the tenant from interfering.
Oral Contract Formation
The doctrine of part performance can allow remedies even if a contract was oral but should, by law, have been in writing. This mainly applies to the sale of land, where a contract must be written. The court can enforce an oral contract to ensure a fair and equitable outcome.
Acts Done by a Party Indicating the Agreement
In deciding whether a contract has been partially performed, the courts will look at the acts carried out that imply the existence of an agreement and its terms.
The principles set out in the case of McBride v Sandland [1918] apply. These include the requirements that:
- The acts carried out by a party in part performance relate unequivocally to a contractual agreement
- They comply with the terms of the agreement, which can be oral
- The party performing the acts in question must have been relying on the contract, and the other party allowed the acts to be carried out because of the existence of the contract
In dealing with part performance of a contract, it is important to be wary of forming a new contract. This could be done in written communications or orally. For example, if one party agrees to accept a lesser payment, you need to understand whether this agreement will be legally binding.
You may also be interested in our article on casual contracts.
Requirements for Part Performance of a Contract
If an agreement is made in which one party will lower the price or agree to a later delivery, and ‘good consideration’ is provided in return, then the courts will often find that a binding contract was made. Consideration could be something more than originally agreed, such as completing work earlier or taking action to avoid delays. It must be a genuine deal made with the other party, not a moral obligation or a gift.
What Are the Remedies for Part Performance of a Contract?
Remedies for part performance of a contract will be tailored to the individual case. They could include:
- Quantum meruit payments, or the payment of a reasonable sum for the work done or services provided, to avoid one party obtaining an advantage without being required to pay anything, using the excuse that the contractual obligations were not fully discharged
- Specific performance, requiring one party to fulfil their contractual obligations
- Damages, which will aim to put a party in the position they would have been in if the contract terms had been adhered to
- Restitution, requiring the return of any benefit received
- An injunction preventing one of the parties from doing something
- Termination of the contract, which will enable the innocent party to claim damages once they have advised the other party that the contract has ended
Dealing with part performance of a contract can be complex, and it is essential to avoid breaching the contract yourself or accepting new contract terms that you do not intend. If you are concerned that contractual obligations are not being fulfilled, you should speak to an expert contract law solicitor to establish your rights.
Contact Our Commercial Dispute Resolution Solicitors
If you need advice on dealing with the part performance of a contract, contact us today. Our experts can advise you on your position and ensure that your rights and interests are observed. Where necessary, we can represent you in resolving a contract dispute.
For more information on our services, see our commercial dispute resolution solicitors page.
To speak to one of our experienced commercial dispute solicitors, ring us on 0330 173 3980, email us at info@witansolicitors.co.uk or fill in our contact form, and we will talk through your situation with you and discuss how we can assist. We have offices in Birmingham, Northampton, London and Wellingborough.
