Contracts Substitute Performance Law & Legal Definition

In contract law, substitute performance may apply to using an alternate method to one provided for in the contract terms in order to fulfill the obligations under the contract. Such alternate method may be, for example, use of another carrier for delivery of goods when the carrier agreed upon is unavailable. When a reasonable substitute is available, it is generally required to be used so that performance is not excused if a substitute performance can reasonably be made.

However, if the performance cannot be performed due to lack of a reasonable substitute, or the unique character of the agreed subject of performance, the contract may be rescinded. For example, if Beverly Sills was hired to perform at a concert and falls ill, her unique talent may be too central to the performance to allow a substitute.

The following is an example of a state statute dealing with substitute performance:

1. "Where without fault of either party the agreed berthing, loading, or unloading facilities fail or an agreed type of carrier becomes unavailable or the agreed manner of delivery otherwise becomes commercially impracticable but a commercially reasonable substitute is available, such substitute performance must be tendered and accepted.
2. If the agreed means or manner of payment fails because of domestic or foreign governmental regulation, the seller may withhold or stop delivery unless the buyer provides a means or manner of payment which is commercially a substantial equivalent. If delivery has already been taken, payment by the means or in the manner provided by the regulation discharges the buyer's obligation unless the regulation is discriminatory, oppressive or predatory."

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