In some situations, a contract may be performed only in part

When entering into a contract, the parties usually assume that it will be performed in its entirety. But if one party tenders only part of the performance it agreed to provide, is the other party required to accept it?

The basic answer under Polish law is “yes,” but there is one important exception provided for in Civil Code Art. 450. Under Art. 450, the creditor may not refuse to accept partial performance, even though the entire claim is already due, unless accepting partial performance would violate a valid interest of the creditor’s.

This rule means that the permissibility of partial performance must be analysed differently in the case of monetary and non-monetary consideration. Payment of part of a debt will never violate an interest of the creditor’s, and thus tender of partial payment should always be accepted. In practice, the creditor should in any situation have an interest in obtaining at least a portion of the money it is owed.

The case may be entirely different with respect to non-monetary consideration provided for in the contract. Then it is necessary to consider more closely whether a tender of only partial performance should be accepted by the creditor. As a rule, it should be accepted, but in order to refuse to accept a tender of partial performance the creditor must demonstrate that receipt of only partial performance would violate a valid interest of the creditor’s.

The law does not specify what would constitute violation of a valid interest of the creditor’s. However, in practice this situation may arise when accepting partial performance would cause the creditor to incur increased costs, such as additional expenses for shipment, storage or security, or would prevent the creditor from beginning production because of an insufficient quantity of raw materials, and so on. In such a case, the creditor may demand complete performance, and has a right to refuse to accept partial performance until the debtor is in a position to perform its contractual obligation in full.

Dr Marcin Lemkowski, Dispute Resolution & Arbitration Practice, Wardyński & Partners

The Polish version of this text was published on 6 December 2012 in the “Commercial Law Academy” series in Dziennik Gazeta Prawna daily.