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I still don't grasp how the comma in the embolded sentence below "is technically incorrect". It can be rewritten without the comma as

The contract allowed the defendant to deliver apples or oranges. Therefore the contract was not breached upon delivery of oranges.

3 There is one exception to the general rule that you should not separate a verb from its subject. If a comma is necessary to make the meaning clear, then you can insert one. For example, the comma in the sentence, ‘The contract allowed the defendant to deliver apples or oranges, and therefore was not breached upon delivery of oranges’, is technically incorrect. However, because the comma groups the term ‘apples or oranges’ visually, it helps the reader understand the meaning of the sentence and is therefore an exception to the general rule. Usually the ‘extra’ comma occurs (properly so) in sentences that have multiple conjunctions and need clarification.

Stacie Strong BA English literature (UC Davis 1986), MPW (USC 1990), JD (Duke 1994), PhD Law (Cambridge 2002), DPhil (Oxford 2003). How to Write Law Essays & Exams 5th Edition (2018). p 138.

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In your re-writing, you have admirably explained why the original sentence is "technically incorrect". You have shown that the subject of the sentence needs to be next to its verb.

The subject is "The contract" and, according to the reference, it should not be separated from its verb ("was not breached") by a comma.

I think that's bunkum.

It's additional information (which can be added after a comma), and the subject is omitted as it's understood. The sentence could easily be "corrected" by adding the subject back explicitly:

The contract allowed the defendant to deliver apples or oranges, and therefore it was not breached upon delivery of oranges.

...but that changes the emphasis slightly. It certainly slows the sentence down, as — even though the brain knows the sentence is talking about the contract, it needs to interpret it. Oh: it must refer to "The contract." Omitting the subject, and using a singular verb, means that the verb was can only refer to "the contract."

So, because the entire two-clause sentence is talking about the contract, it's perfectly permissible to omit the subject. In fact in some circumstances it's actually preferable:

The contracts allowed the defendant to build dams or weirs, and therefore they were not breached when the river flooded.

In that sentence, what was breached? It could be the contracts; it could be that dams were actually breached and caused the river to flood. However, a dam which overflows is behaving as a weir. The ambiguity could be removed by replacing the pronoun with its referent,

The contracts allowed the defendant to build dams or weirs, and therefore the contracts were not breached when the river flooded.

...but is actually more easily and fluidly/idiomatically removed by omitting the repeated subject altogether:

The contracts allowed the defendant to build dams or weirs, and therefore were not breached when the river flooded.

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