Failure to perform: Overview, definition and example
What is failure to perform?
Failure to perform refers to a situation where one party in a contract does not fulfill their obligations or duties as outlined in the agreement. This could include not meeting deadlines, failing to deliver goods or services, or not following the terms of the contract. Failure to perform is often considered a breach of contract and can lead to legal consequences or the right for the other party to seek remedies.
Why is failure to perform important?
Failure to perform is important because it directly impacts the trust and reliability between parties involved in a contract. If one party doesn’t fulfill their responsibilities, the other party may experience financial losses or disruptions to their business. Understanding the consequences of failure to perform helps businesses ensure they meet their commitments and take appropriate actions when things go wrong.
Understanding failure to perform through an example
Imagine you sign a contract with a construction company to build a new office building. The contract specifies that the building must be completed within six months. If the construction company fails to meet the deadline without a valid reason or without notifying you in advance, this is considered failure to perform. As a result, you could be entitled to compensation for any delays or damages caused.
In another case, a software provider agrees to deliver a customized solution by a set date, but they fail to do so, causing operational delays for the client. This failure to perform might allow the client to cancel the contract or seek damages for the delay.
Example of a failure to perform clause
Here’s how a failure to perform clause might look in a contract:
“If either party fails to perform any material obligation under this Agreement within the time specified, the non-defaulting party may terminate the Agreement or seek remedies, including damages, in accordance with applicable law.”
Conclusion
Failure to perform is a serious matter in business contracts. It can lead to delays, financial losses, and legal disputes. To avoid failure to perform, both parties should clearly define their responsibilities in the contract and be prepared to address any issues that arise during the performance of their obligations.
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.