Option number one is deduct the cost of fixing the problem
from the amount they pay.
So in our example, the contractor delivers the double pane windows instead of
the triple pane windows.
Well, it's pretty easy to figure out,
how much is it going to cost to replace those windows?
Or how much extra will our utility bills be because of this?
And just deduct that from the price that you pay them.
Now, the other option is to go ahead and pay the full contract price, and
then sue the other party for damages.
You can do either one of those things, but what you cannot do,
in the case of substantial performance, is just terminate the entire agreement.
Because the other party did most of what they were supposed to do.
I mean, the breach is minor, so you can't just terminate the contract.
Now, in the case of what's called inferior performance,
this is a material breach that frustrates the very heart and soul of the contract.
In that case, you can terminate the contract.
So for example,
in our scenario where you hire someone to build your office building for you.
Maybe they used the wrong type of concrete for the foundation, so
it's not string enough to hold all your employees and your equipment.
And maybe the conference room isn't big enough, and
there's no solar panels on the roof, and they used single pane on the windows,
and everything is wrong, that's inferior performance.
It's a material breach of the contract, and in that case, the non-breaching party,
again, has a couple of remedies, and they're different remedies.
The first one is you can accept the performance that was rendered and
sue for damages.
Now, accepting the performance that was rendered might mean, I was
supposed to get a building with these specifications that was worth $10 million,
what I really got was a totally different building with different specifications
that's maybe only worth $3 million.
So you can sue for the difference if you say, look, we can still use this,
not for what we intended to use it for, but we can use it for something.
So we'll take it, but we'll sue for the damages and the difference.
And not just difference in what you got and what you are supposed to get, but
also some other types of damages.
We'll talk about damages in different lesson.