Entire Contract

Definition of Entire Contract

An entire contract can be defined as a contract in which there is legally binding agreement, implicit or explicit, that neither party may demand performance until he is ready to fulfill, or has fulfilled, his promise. The major effect of this entire contract application is that the promisor’s promise is condition precedent for the promisee’s duty to perform his obligation.

 

According to Gill Judge, an entire contract is one in which the entire completion of the work by the contractor is a condition precedent to payment.  To him, a contract in respect of which progress payments are made from time to time is not an entire or lump sum contract. Moreover on the principles of English law laid down in Cutter v Powell (1795) 6 TR 320 and other cases, the contractors having contracted to do an entire work for a specific sum, can recover nothing unless the work be done, or it can be shown that it was the employer’s fault that the work was incomplete, or that there is something to justify the conclusion that the parties have entered into a fresh contract. In an entire contract, if there is an accident not by fault of both parties, which causes the end of the contract, the contractor cannot claim for the payment since both parties bear their own damages and no party gets any benefit of the contract.

 

 

Entire Contract & Divisible Contract: The Differences

Performance of contract can be distinguished between a divisible contract and an indivisible (or entire) contract. In a divisible contract, the obligations of the parties are independent of each other. Therefore one party can demand performance by the other without rendering performance himself. For example, a landlord though liable to be sued by his tenant for not carrying out a repairing covenant, is not prevented by his own default from enforcing the tenant’s covenant to pay rent to him.

However, most of construction contract are indivisible or entire contract. It means that the obligations of the parties are interdependent. Neither party can demand performance unless he himself either has performed or is ready and willing to do so. At common law, complete and precise performance was originally required, so that a party who rendered anything short of this (for example, a builder who carried out the contract work, but defectively in some respects) could recover nothing for his efforts. This extreme position was subsequently modified by the doctrine of substantial performance.[1]


[1] Taken from Oxford Dictionary of Law 7th Edition, pg 402.

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