(b) That's right. Unless there is complete performance, the contractual obligations are not discharged. But in this example there is only a relatively small difference between what was promised and what was done. While it is true to say that there is still a breach of a condition, it seems unreasonable, when the discrepancy is so small, to allow the entire performance to be rejected.
To take account of such cases, the courts have developed the concept of 'substantial performance'. This means that, unless the parties have agreed that complete performance is essential, performance which is sufficient to give the plaintiff the expected benefits of the contract (substantial performance) cannot be rejected. Instead, the shortfall must be treated as a minor breach of contract for which an appropriate adjustment in the price payable can be made, or damages claimed.
In the present case, X has substantially performed the contract with a 5% shortfall. The municipal authority would be required to pay X 95% of the agreed price. The municipal authority could claim as damages from X any additional expenses incurred acquiring the outstanding trees from another supplier.