When a party’s performance is not perfect but substantial, the nonbreaching party may recover the contract price minus the costs incurred to receive full performance. This is an example of:

• A. A The time of performance rule
• B. B Substantial performance damages
• C. C Liquidated damages
• D. D Specific performance

Answer: (B)

Substantial performance damages are used when one party has largely done what the contract requires but with some defects. In this scenario the nonbreaching party can recover the contract price minus the costs they incurred to obtain full performance or to cure the defects. This method measures damages by the value of what was delivered, while subtracting the extra expense needed to complete or fix it, so the recovery reflects the actual benefit received from the performance. It sits between full performance (which would yield the full contract price) and a complete breach, and it’s not tied to any pre-set liquidated amount or to a court ordering specific performance.