What Is a Divisible Contract ?

A "divisible" contract is one "under which the whole performance is divided into two sets of partial performances, each part of each set being the agreed exchange for a corresponding part of the set of performances to be rendered by the other promisor . . . ." (6 Williston on Contracts (3d ed. 1962) 860, p. 252 (Williston); see also World Sav. & Loan Assn. v. Kurtz Co. (1960) 183 Cal. App. 2d 319, 327 6 Cal. Rptr. 665. "It a contact is severable if it is in its nature and purpose susceptible of division and apportionment, having two or more parts, in respect to matters and things contemplated and embraced by it, not necessarily dependent upon each other nor intended by the parties to be so.".) It is one in which two or more separate partial performances on each side are agreed to be exchanged for partial performances on the other side. The failure to perform one part does not bar recovery for performance of another. (See Agnifili v. Lagna (1928) 204 Cal. 262, 267 267 P. 705; Lowy v. United Pacific Ins. Co. (1967) 67 Cal. 2d 87, 91-92 60 Cal. Rptr. 225, 429 P.2d 577.) The "performance of each division of the service will be impliedly a condition precedent to the recovery of a corresponding portion of the price." (6 Williston, supra, 864, p. 284, fn. omitted.) Once a contract is determined to be divisible, various consequences ensue. "If the performances to be exchanged under an exchange of promises can be apportioned into corresponding pairs of part performances so that the parts of each pair are properly regarded as agreed equivalents, a party's performance of his part of such a pair has the same effect on the other's duties to render performance of the agreed equivalent as it would have if only that pair of performances had been promised." ( Rest.2d Contracts, 240, italics added.) Comment a to section 240, states: "This Section embodies another mitigating doctrine which reduces the risk of forfeiture in that important class of cases in which it is proper to regard corresponding parts of the performances of each party as agreed equivalents. Its effect is to give a party who has performed one of these parts the right to its agreed equivalent just as if the parties had made a separate contract with regard to that pair of corresponding parts." (Rest.2d Contracts, 240, com. a, pp. 229-230.) Thus, if a party has breached one part of a divisible contract, he or she is not precluded from obtaining the consideration that was allocated to that portion of the contract that he or she performed. (See Lowy v. United Pacific Ins. Co., supra, 67 Cal. 2d at p. 92.) However, a divisible contract is still only one contract. ( Rest.2d Contracts, 240, com. b, p. 230.) "The pairs of corresponding parts in a divisible contract are not treated as if they were separate contracts. If there are two separate contracts, one party's performance under the first and the other party's performance under the second are not to be exchanged under a single exchange of promises, and even a total failure of performance by one party as to the first has no necessary effect on the other party's duty to perform the second. . . This is not so, however, if there is a single contract under which the parties are to exchange performances, even though it is proper to regard pairs of corresponding parts of those performances as agreed equivalents. If there is an uncured material failure by either party, he can claim compensation for any parts that he has already performed, but he cannot enforce the contract with respect to any other pair of corresponding parts, including the part or parts that he has failed to perform." (Ibid.) Since a divisible contract is still only a single contract, the customary rules regarding contract formation are applicable. Those rules provide that a contract induced by fraud renders the entire agreement voidable, permitting the aggrieved party to defend a suit on the contract by objecting to its enforcement because procured or induced by fraud. (California Credit etc. Corp. v. Goodin (1926) 76 Cal. App. 785, 792 246 P. 121; Friedberg v. Weissbuch (1955) 135 Cal. App. 2d 750, 756 287 P.2d 785.)