Performance, in law, is the act of doing that which is required by a contract. The effect of successful performance is to discharge the person bound to do the act from any future contractual liability.
Each party to the contract is bound to perform promises according to the stipulated terms.
A party who performs all his obligations under a contract is discharged or is free from any liability under that contract. If both parties fully perform their obligations under the contract, then they are both discharged from the obligations under the contract, which therefore comes to an end.
The order in which the parties should perform their obligations in a bilateral contract depends on whether a party has an obligation to perform a condition precedent, whether the mutual obligations are concurrent on whether they are independent of each other.
Where the mutual obligations are concurrent, neither party can sue unless he has performed or is ready to perform his part of the contract.
There is partial performance. This occurs when a party fails to perform fully all his obligations under a contract. Therefore, performance must be both precise and complete before any claim can be made.
There is substantial performance. This is the rule that the entire performance of a contract was a condition precedent to payment, was subject to the qualification that if the contract had been substantially performed, even though some small part of the work had been done badly or not done at all, the contractor is entitled to the stipulated price less deductions to remedy the minor defects or lapses. The injured party will also have an action for any damages he may have sustained.
It should be noted that the doctrine of substantial performances is merely a qualification and not an exception of the basic rule stated in Cutter v. Powell.
In the case of Cutter v. Powell, the defendant agreed to pay Cutter 30 guineas provided he "proceeds, continues and does his duty" as second mate in sailing the ship Governor Parry from Jamaica until it arrived in Liverpool. The ship sailed from Kingston, Jamaica on August 2, 1793 and arrived in Liverpool on October 9. But Cutter died en route on September 20. He had performed his duties as second mate right until the day he died. His wife, the plaintiff, claimed payment for Cutter's services in quantum meruit. The action failed because according to the court Cutter was by the terms of the contract to perform a given duty before he could call on defendant to pay him anything. It was a condition precedent, in the absence of which the defendant could not be liable. Since Cutter did not perform his duties completely, even though due to no fault on his part, his estate was not entitled to any renumeration. The fact that the fee of 30 guineas was about four times the normal rate of payment was used by the court to reinforce its views.
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