exists. Satisfactory performance is either an express or implied condition of every contract.
When both parties fully accomplish every term, condition, and promise to which they agreed, complete performance occurs. When a party, in good faith, executes all promised terms and conditions with the exception of minor details that do not affect the real intent of their agreement, substantial performance occurs. Complete performance terminates an agreement, discharging the parties of any further obligation to one another. Ordinarily, substantial performance also serves to discharge the agreement but with a difference. A party, who complains that performance has been substantial, but not complete, has the right to demand reimbursement from the offending party to correct those details that prevented complete performance.
Failing to fulfill or accomplish a promise, contract, or obligation according to its terms defines nonperformance.
Parties to a contract may stipulate the time and conditions for termination and discharge as part of their agreement. They also may subsequently agree not to do what they had originally promised. The latter is the case when there is a mutual rescission of the contract, a waiver of performance by one or more of the parties, a novation, or an accord and satisfaction to liquidate an outstanding debt or obligation.
During contract negotiation, parties may agree to certain terms that provide for automatic termination upon the occurrence or nonoccurrence of stated events. These terms are categorized as conditions subsequent.
Contracting parties may, either before or after performance commences, rescind their contract as a result of further negotiation and by their mutual assent. Mutual rescission requires both parties to return to the other any consideration already received or to pay for any services or materials already entered.
When a party with the right to complain of the other party's unsatisfactory performance or nonperformance fails to complain, termination by waiver occurs. It is a voluntary relinquishing (waiver) of one's rights to demand performance. A waiver differs from a discharge by mutual rescission in that a waiver entails no obligation by the parties to return any consideration that may have been exchanged up to the moment of rescission. Discharge by waiver, when made, is complete in itself.
By novation, the parties to a contract mutually agree to replace one of the parties with a new party. The former, original, party is released from liability under the contract.
