In a few cases，both the case law and the UCC provide relief from the requirement of strict compliance with the terms of the contract. Thus，the case law developed the doctrine of substantial performance which allows the debtor to recover despite minor deviations from the requirement of the contract \ his claim will be reduced by the cost of rectifying the defective performance. The UCC contains similar provisions concerning the delivery of non-conforming goods.

A party to a contract may be relieved from the duty to perform or from his liability for breach if the other party wrongfully prevents him from performing, or if the other party has waived his right to insist on performance, or if performance becomes impossible or commercially impracticable.

When both parties have completed their performance in full, or when impossibility or other conditions have freed the nonperforming party from any liability, the contractual relationship is terminated and the parties are discharged from their obligations. Other possibilities to discharge a contract include release (or renunciation), mutual rescission and the conclusion of a new contract (novation). A release is usually a written statement by one party to discharge the other’s duty under the contract. In a commercial relationship it requires consideration. Mutual rescission occurs only when the contract is still executory on both sides. If one party has performed in full, rescission will lack consideration. As an alternative to it the parties will then conclude a new contract to replace the old one.

When one of the parties to a contract fails to perform as promised without excuse, that party may have breached the contract. Breach includes» in addition to nonperformance ,delayed performance in cases in which it was due at a particular time as a result of an express stipulation or implied condition, as well as defective performance. In addition, a party to a contract may breach by anticipatory repudiation 9 i. e. » by repudiating the contract before performance is due.

Remedy for breach of contract may be classified as legal or equitable. Legal remedies (remedies at law) involve the recovery of money damages and include nominal damages f compensatory (or general) damages, consequential (or special) damages, and punitive (or exemplary) damages. Nominal damages (usually $ 1) are awarded to the nonbreaching party who suffers no loss. Occasionally businesspersons sue for nominal damages so they can establish judicial precedent concerning their rights under contracts that involve continuing, long-term relationships. Compensatory damages are to make the injured party whole—to put him in the same position he would have occupied had there been no breach,5 They arise directly and naturally from the contract breach. Damages resulting from special circumstances that are not normally foreseeable are called consequential damages. To recover these damages the injured party must submit proof that the breaching party knew or had reason to know that special circumstances existed and would cause the other party to suffer additional losses if the contract were breached.6 Punitive damages are usually associated with torts. However, the modern trend is to allow punitive damages when the contract breach is fraudulent, oppressive, malicious，or otherwise indicative of the breaching party’s intent to harm the other’s reasonable expectations under the contract.

Additionally, the parties may insert in their contract a provision that attempts to state the amount of money damages to be awarded for contract breach. This liquidated damages clause» if fair and not a penalty, will be adopted by the court.

When money does not provide adequate relief for the injured party, equitable remedies are allowed. Examples of equitable remedies include specific performance, rescission, and restitution. Specific performance is a remedy that requires the party in breach to do exactly what he agreed to do under the contract. Rescission disaffirms (annuls) the contract and returns the parties to the position each occupied before making the contract. Restitution (sometimes called quasi-contract) rectifies unjust enrichment by forcing the party who has been unjustly enriched to return the item unfairly gained, or its value if the item cannot be returned.

Answer the following questions :
1. Explain "strict performance" and "substantial performance".
2. What will happen if a party’s performance is defective but substantial?
3. What are the circumstances under which a party to a contract will be relieved from his duty to perform?
4. Name as many ways as you can to terminate a contractual relationship.
5. What is the difference between a release and a rescission?
6. What is anticipatory repudiation?
7. What is legal remedy? And equitable remedy?
8. What is the legal remedy for breach of contract? What does it include?
9. Under what circumstances will the court award punitive damages to the injured party?
10. What are the usual forms of equitable remedy? Under what circumstances will the court allow equitable remedy?
11. Explain specific performance.
12. Why is restitution also called quasi-contract? What is its purpose?

Repudiation is related to the doctrine of anticipatory breach which has its origin in an English decision of 1853 (Hochester v. De la Tour). A distinction which does not always appear clearly from the case law is that repudiation often terminates the contract and entitles the damaged party to restitution of its performance, while an anticipatory breach constitutes an "early breach" of the contract and entitles the innocent party to contract damages. Anticipatory breach exists when，in a bilateral contract» a party does not render the part performance now due and thereby puts into question the value of its total performance, as well as when a contract debtor renders his performance impossible in advance, for instance, by selling the object to a third person, by declaring bankruptcy, or even by becoming or appearing to be insolvent.