§237. EFFECT ON OTHER PARTY’S DUTIES OF A FAILURE TO RENDER PERFORMANCE

Except as stated in §240, it is a condition of each party’s remaining duties to render performances to be exchanged under an exchange of promises that there be no uncured material failure by the other party to render any such performance due at an earlier time.

Comments....

d. Substantial performance. In an important category of disputes over failure of performance, one party asserts the right to payment on the ground that he has completed his performance, while the other party refuses to pay on the ground that there is an uncured material failure of performance....In such cases it is common to state the issue...in terms of whether there has been substantial performance....If there has been substantial although not full performance, the building contractor has a claim for the unpaid balance and the owner has a claim only for damages. If there has not be substantial performance, the building contractor has no claim for the unpaid balance, although he may have a claim in restitution.