Strict performance: Overview, definition, and example
What is strict performance?
Strict performance refers to the requirement that a party to a contract must fully and exactly comply with the terms and conditions of the agreement. In other words, strict performance means that the obligations specified in the contract must be performed without deviation or modification, adhering precisely to the language and stipulations set forth in the agreement.
In a strict performance scenario, any failure to meet the agreed-upon terms, no matter how minor, may result in a breach of contract, giving the non-breaching party the right to seek remedies, such as damages or termination of the contract. This standard is often applied in contracts where precise execution of terms is critical, such as in construction contracts, certain service agreements, or contracts involving high-value transactions.
Why is strict performance important?
Strict performance is important because it ensures that both parties fulfill their contractual obligations exactly as agreed upon. This creates certainty and predictability in business transactions, allowing parties to rely on the contract’s terms. For the party performing the contract, strict performance eliminates any ambiguity regarding what is required and ensures that they fully meet their obligations.
For the receiving party, strict performance guarantees that they will receive the benefits they were promised, in the manner and timeframe specified in the agreement. This is especially important in contracts where timing, quality, or quantity of performance is of the essence.
Understanding strict performance through an example
Imagine you hire a contractor to build a custom piece of furniture for your office, and the contract specifies that the piece must be delivered by a certain date and meet specific design standards. Under a strict performance requirement, the contractor must deliver the piece exactly as described in the agreement—on time, with the exact specifications outlined, and in the quality promised. If the contractor delivers the furniture late, or if the piece doesn’t meet the agreed-upon design, it would be considered a breach of the contract, and you could seek legal remedies.
In another example, consider a situation where a supplier is contractually obligated to deliver 1,000 units of a product to your business by a certain date. If the supplier only delivers 900 units or delivers them after the agreed date, it could be considered a failure to strictly perform the contract, even if the deviation is minor.
Example of a strict performance clause
Here’s an example of what a strict performance clause might look like in a contract:
“The Supplier agrees to deliver the goods described in this Agreement strictly in accordance with the specifications set forth in Exhibit A. Any deviation from the agreed-upon specifications, quantity, or delivery schedule shall be considered a breach of this Agreement, and the Buyer shall have the right to terminate the contract or seek remedies for any damages incurred as a result of such non-performance.”
This clause emphasizes that the supplier must adhere strictly to the contract terms and defines the consequences of failing to do so.
Conclusion
Strict performance is a fundamental concept in contract law, requiring that all terms and conditions of an agreement be met precisely as specified. It ensures that both parties are held accountable for their obligations and provides clarity and security in business relationships. For parties entering into a contract, understanding the implications of strict performance helps ensure that they are fully prepared to meet their obligations and protects them from potential breaches. Strict performance is especially important in contracts where precision is critical, and deviations can lead to financial losses or legal disputes.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.