Refraining from Performance

A party may have a right to abstain from performing their part of the contract as a consequence of another party’s breach. The justification for refraining from payment derives from the idea that a party is only obliged to fulfill their obligations provided the other party fulfills theirs.

A party has a right to abstain from their performance if they are obliged to perform their part after the other party has performed. This is also possible in respect of simultaneous performances, but not in situations where the buyer has agreed to pay the purchase price in advance.

Typically, a party retains the right to withhold their performance to a degree corresponding with the breach. If the breach of an agreement extends beyond delayed payment or the performance cannot be segmented, the party may choose to abstain from performance entirely.

If a party wishes to exercise the right of restraint, they must ensure having a right to do so as unlawful restraint of performance is also considered a breach of contract.