The ratable performance doctrine or rule of apportionment has a long history in contract law as an equitable approach to contractual performance. It applies when a contract has been breached, and the goal is to allocate the loss equitably between the parties. The doctrine is based on the premise that a party should not bear the entire burden of the breach when that party has partly performed the contract.
The rule of ratable performance is also known as the doctrine of apportionment or the doctrine of equitable apportionment, and the principles and application have been established by a long line of case law. To begin with, the doctrine requires that some performance must be shown for the breach to be justly assessed, and that mere promises of performance are insufficient. When there has been a breach, the promised performance must be apportioned to the parties in an equitable manner.
When applying the ratable performance doctrine, a court will assess the extent of the breach and compare it to the extent of the promised performance. From there, the court decides the equitable apportionment of the breach in order to establish an equitable and fair award for the non-breaching party. This award must reflect the benefits the non-breaching party was expecting to receive from the breaching party, and must be a fair and just award taking into account the circumstances of the breach.
When addressing a breach of contract and assessing damages, courts consider a number of factors. These include the extent of the benefit the non-breaching party was expecting to receive, the nature and duration of the breach, the timing of the breach, and any potential mitigation of the breach. A court may also consider any special circumstances that would affect the equitable apportionment of the breach. For example, if the non-breaching party had already partially performed their obligations and the breach caused additional damages, the court may consider this when making an award.
When a breach of contract occurs and the ratable performance doctrine is applied, a courts decision will depend upon the facts and circumstances of the case. This doctrine allows the court to fairly and equitably allocate the damages between the parties, so that a party who has benefitted from a breach is not unjustly enriched, while a party who has suffered a loss is not unduly punished. The doctrine of apportionment provides a judicial remedy to adjust damages that would otherwise be disproportionate to the breach.
In summary, the ratable performance doctrine provides an equitable approach to determining liability of a breach of contract. The court takes into account the nature and extent of the breach, the amount of performance already completed and any special circumstances that warrant consideration. The court will then apportion the loss to be suffered in an equitable manner, taking into account the damages that the non-breaching party was expecting to receive and the potential for the breaching party to be unjustly enriched by the breach. Thus, the ratable performance doctrine allows a court to equitably adjust the damages for a breach of contract, ensuring that a non-breaching party is not unduly punished and that a breaching party is not unjustly enriched.
