A contract imposes obligations on each party to satisfy the conditions of the contract. The duty to fulfill these obligations is called the duty of performance. Generally, the duty of performance is the duty to fulfill each of the conditions of the contract. The failure to fulfill the conditions of the contract is a breach of the contract. When one party breaches a contract, the other party (also known as the nonbreaching party) may be entitled to remedies.

A party usually must perform the duties listed in a contract exactly as they are listed. The performance of these duties is the benefit that the other party bargained for — to provide less than full performance would deprive the other party of the full benefit of the bargain. Nevertheless, the failure to perform all of the obligations of the contract exactly as listed will not prevent the enforcement of the contract. A party who, in good faith, performs the obligations of the contract in a way that provides the other party the essential benefits of the contract, has substantially performed the obligations of the contract. Because the performance is substantial, the contract can be enforced, but because the performance is not exact, the other party may be entitled to damages resulting from the inadequate performance.

Circumstances sometimes prevent a party from performing the obligations of the contract. Weather, natural disasters, wars, or changes in the law can affect the ability of a party to perform contractual obligations. When performance is impossible because of circumstances beyond the control of the parties, the performance is excused under the doctrine of impossibility of performance.