Abatement Definition Contract Law: Everything You Need to Know

As a business owner or someone working with contracts, you are sure to have come across the term ‘abatement’ at some point. Understanding what it means and how it applies to your contracts can save you from legal complications in the long run. In this article, we discuss the abatement definition contract law and everything else you need to know about it.

Definition of Abatement in Contract Law

Abatement is the reduction or decrease in the amount of money owed under a contract when there is non-performance by either party. It is used in situations where the performance of one party is incomplete or defective, which in turn affects the other party`s performance. Abatement allows the other party to reduce the amount of money owed to the non-performing party based on the completion percentage of the contract or the relative value of the defective performance.

Abatement can be either a partial or total reduction of payment owed. For example, if a construction contract has a stipulated $100,000 fee, and the contractor is only able to complete 90% of the work, the client may demand an abatement of the remaining 10% of the fee.

Types of Abatement in Contract Law

There are three broad categories of abatement in contract law, which are:

1. Partial Abatement: This is where, despite non-performance by one party, the other party still derives some benefit from the contract. In this case, the non-performing party is still entitled to some payment, although it may be reduced.

2. Total Abatement: This is when non-performance by one party means that the other party does not derive any benefit from the contract. In this case, the non-performing party does not receive any payment at all.

3. Constructive Total Abatement: This happens when a non-performing party has already received some payment but not in proportion to their work done. In this case, the payment received is reduced to reflect the real value of the work done.

Conclusion

Abatement is a crucial aspect of contract law that helps protect both parties involved in a contract. It ensures that the non-performing party does not receive the full payment they were entitled to under the contract. As a business owner or someone working with contracts, understanding the concept of abatement and its application is vital to avoid legal complexities that may arise from non-performance. With this comprehensive guide on abatement definition contract law, you can make informed decisions when drafting and signing contracts.