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PERFORMANCE OF CONTRACT

PERFORMANCE OF CONTRACT. PERFORMANCE OF CONTRACT:

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PERFORMANCE OF CONTRACT

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  1. PERFORMANCE OF CONTRACT

  2. PERFORMANCE OF CONTRACT: • Performance of a contract takes place when the parties to the contract fulfil their obligations arising under the contract within the time and in the manner prescribed. Sec. 37 lays down that the parties to a contract must either -perform or offer to perform their respective promises, unless such performance is dispensed with or excused. • Performance of a contract is the most usual mode of discharge of a contract. • Performance may be: • (I) Actual performance: When each party to a contract fulfils his obligation arising under the contract within the time and in the manner prescribed, it amounts to actual performance of the contract and the contract comes to an end or stands discharged. • (2) Attempted performance or Tender: When the promisor offers to perform his obligation under the contract, but is unable to do so because the promisee does not accept the performance, it is called ‘attempted performance’ or ‘tender.’ Thus ‘tender’ is not actual performance but is only an ‘offer to perform’ the obligation under the contract. A valid tender of performance is equivalent to performance.

  3. ESSENTIALS OF A VALID TENDER: • A valid tender or offer of performance must fulfil the following conditions. • 1. It must be unconditional A conditional tender is no tender. It becomes conditional when it is not with the terms of the contract. • 2.It must be made at proper time and place. A tender before or after the due date or at a place other than agreed upon is not a valid tender: • 3. It must be of the whole obligation contracted for and not only of the part. Thus deciding of his own to pay in instalments and offering the first instalment was held an invalid tender as it was not of the whole amount due . • 4. If the tender relates to delivery of goods, it must give a reasonable opportunity to the promisee for inspection of goods so that he may be sure that the goods tendered are of contract description.

  4. 5. It must be made by aperson who is in a position and is willing to perform the promise. A tender by a minor or idiot is not a valid tender. • 6. It must be made to the proper person, i.e., the promisee or his duly authorised agent. Tender made to a stranger is invalid. • 7. If there are several joint promisees, an offer to any one of them is a valid tender. (But the actual payment must be made to all joint promisees, and not• to any one of them, for a valid discharge of the contract. • 8. In case of tender of money, exact amount should be tendered in the legal tender money.

  5. CONTRACTS WHICH NEED NOT BE PERFORMED • A contract reed not be performed— • 1. When its performance becomes Impossible (Sec. 56) • 2. When the parties to it agree to substitute a new contract for it or to rescind or alter it (Sec 62) • 3. When the promisee dispenses with or remits, wholly or In part, the performance of the promise made to him or extends the time for such performance or accepts any satisfaction for it (Sec. 63) • 4. When the person at whose option it is voidable, rescinds it (Sec. 64) • 5. When the promisee neglects or refuses to afford the promisor reasonable facilities for the performance of his promise (Sec. 67) • 6. When it is illegal.

  6. BY WHOM MUST CONTRACTS BE PERFORMED • 1. Promisor himself. This means contracts which involve the exercise of personal skill, volition, or diligence of the promisor, or which are founded on personal confidence between the parties must be performed by the promisor hlmself. • 2. Agent. Where personal consideration is not the foundation of a contract, the promisor or his representative, may employ a competent person to perform it (Sec. 40). • 3. Legal representatives. A contract which does not involves the use of personal skill can be performed by the legal representatives of the deceased promisor. But their liability under a contract is limited to the value of the property they inherit from the deceased. • 4. Third persons. When a promise accepts performance of the promise from a third person, he cannot afterwards enforce it against the promisor. • 5. Performance of joint promises. There may be contracts having joint promisors or joint promisees. There may be two or more creditors entitled to the same obligation, or two or more debtors under the liability. In a joint promise, two or more individuals are bound to perform it together jointly and not severally

  7. TIME AND PLACE FOR PERFORMANCE • 1. Where prescribed by the promisee: Where the time and place are prescribed by the promisee, the performance of the contract must be at the specified time and place. • 2. Where not prescribed by the promisee: If no time and place are prescribed by the promisee, then the contract must be performed: • (a) Within a reasonable time, on a working day and within the usual hours of business. • (b) At proper place

  8. FAILURE TO PERFORM A CONTRACT WITHIN THE STIPULATED TIME. • According to Section 55 the following rules are applicable in such case: • a. Where ‘time is of the essence of the contract’, and there is failure to perform within the fixed time, the contract (or so much of it as remains unperformed) becomes voidable at the option of the promisee. He may rescind the contract and sue for the breach. • b. Where ‘time is not of the essence of the contract,’ failure to perform within the specified time does not make the contract voidable. In such a case the promisee cannot rescind the contract and he will have to accept the delayed performance. But he would be entitled to claim compensation from the promisor for any loss caused to him by the delay. • c. In case of a contract voidable on account of the promisor’s failure to perform his promise within the agreed time or within a reasonable time, as the case may be, if the promisee, instead of rescinding the contract, accepts the delayed performance, he cannot afterwards claim compensation for any loss caused by the delay, unless, at the time of accepting the delayed performance, he gives notice to the promisor of his intention to do so.

  9. DEVOLUTION OF JOINT LIABILITIES • Section, 45 provides that when a promise is made to several persons jointly, then, unless a contrary intention appears from the contract, the right to claim performance rests with all the promisees jointly and a single promisee cannot demand performance. • When any one of the promisees dies, the right to claim performance rests with the legal representatives of such deceased person jointly with the surviving promisees. • When all the promisees are dead, the right to claim performance rests with the legal representatives of all jointly.

  10. RIGHTS AND LIABILITIES OF JOINT PROMISEES • 1. All promisors must Jointly fulfil the promise. When two or more persons have made a joint promise (e.g., signed a promissory note jointly), then, unless a contrary intention appears by the contract, all such persons must jointly fulfil the promise. When any one of the Joint promisors dies, his legal representatives must, jointly with the surviving promisors, fulfil the promise. (Sec. 42). • 2. Any one or more of joint promisors may be compelled to perform. When two or more persons make a joint promise, the promisee is entitled, in the absence of express agreement to the contrary, to compel any one or more of such joint promisors to perform the whole of the promise (Sec. 43] • 3. Right of contribution inter-se between joint promisors. If one of several joint promisors is made to perform the whole contract, he may require equal contribution from the other joint promisors, unless a contrary intention appears from the contract (Sec. 43) • 4. Sharing of loss by default in contribution. If any one of the joint promisors makes a default in making contribution, if any, the remaining joint promisors must bear the loss, from such default in equal shares (Sec.43). • 5. Effect of release of one joint promisor. In case of joint promise, if one of the joint promisors is released from his liability by the promisee, his liability to the promisee ceases but this does not discharge the other joint promisors from their liability; neither does it free the joint promisor so released from his liability to contribute to the other joint promisors (Sec. 44).

  11. ORDER OF PERFORMANCE OF RECIPROCAL PROMISES • Promises which form the consideration for each other are called ‘reciprocal promises’ or ‘mutual promises.’ It is common knowledge that ‘bilateral contracts,’ where both contracting parties have to perform their promises, involve ‘mutual promises’ amongst the parties. In such contracts each party gives a promise, in return for a promise. • RULES REGARDING THE ORDER OF PERFORMANCE OF RECIPROCAL PROMISES • Reciprocal promises may be classified into three categories: The rules regarding the order of performance of reciprocal promises, are follows: • 1. Mutual and Independent. • 2. Mutual and Dependent. • 3. Mutual and Concurrent. • 4. Consequences where a party prevents performance.

  12. ASSIGNMENT OF CONTRACT • Assignment of contract means transfer of contractual rights and liabilities to a third party with or without the concurrence of the other party to the contract. • RULES • 1. Contracts involving personal skill, taste or credit, e.g., a contract to paint a picture, a contract to perform a service or to marry, cannot be assigned. • 2. The obligations (i.e., the liabilities) under a contract cannot be assigned except with the consent of the promisee, and when such consent is given, it is really a ‘novation’ resulting in a substitution of liabilities. • 3. The rights and benefits under a contract are assignable unless the contract is of personal nature or the rights are incapable of assignment either under the law or under an agreement between the parties, and the assignee can demand. • 4. Assignment by operation of law takes place in cases of death and insolvency. Upon the death of a party his rights and liabilities under a contract devolve upon his heirs and legal representatives ,except in the case of a contract involving personal qualifications. In case of insolvency, all rights and liabilities of the insolvent pass to the Official Assignee or Receiver, as the case may be.

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