Performance of contract

PERFORMANCE OF CONTRACTS
Who must perform?
Sec.37: The parties to a contract must
either perform, or offer to perform their
respective promises,
unless such performance is dispensed with or
excused under the provisions of this Act, or
of any other law.
Representatives Liability: Promises bind the
legal representative of the deceased
promisor.

Ashok promises to deliver goods to Babu on a

certain day on payment of Rs.1000. Ashok dies
before that day. Ashoks representative is
bound to deliver the goods to Babu who in turn
is bound to pay the amount to Ashoks
representative.
Mr.A promises to paint a picture for Mr.B by a
certain day, at a certain price. Mr.A dies before
the day. The contract cannot be enforced
either by Mr.As representative or by Mr.B.

Types of Performance?

Actual performance
Attempted performance or offer to perform
(tender of performance)

What is Tender of Performance?

It is also called offer of performance. It is
when the parties to a contract offer to
perform their respective promises.
Essentials of a valid tender of performance:
It must be unconditional: X offers to give his
house to Y, if Z permits. Offer is conditional,
hence not a valid tender.
Offer must be made by promisor or
representative.

Must be made at reasonable time & place.

Offer cannot be of the part of performance.
For example, a stakeholder not bound to
accept less than what is actually payable.
Promisor is bound by his promise to deliver
the same thing and promisee has opportunity
to examine the same.
In case of joint promises, the tender is valid.
It must be made to promisee or his duly
authorized agent.

Summary - Requisites of a valid

tender

It must be unconditional.
It must be of the whole quantity.
It must be by a person in a position.
It must be made at the proper time and place.
It must be made to the proper person.
It may be made to one of the several joint
promisees
It must give a reasonable opportunity to the
promisee for inspection of the goods.
The debtor must make a valid tender in legal
tender money.

Effects of refusal of a party to

perform promise wholly
Contracts which need not be performed:
When its performance becomes impossible.
When the parties to it agree to substitute a
new contract for it or to rescind or alter it.
When the promisee dispenses with or
remits, wholly or in part.
When the person at whose option it is
voidable, rescinds it.
When the promisee neglects or refuses to
afford.

By whom must contracts be performed?

1.
2.
3.
4.
5.

Promisor himself.
Agent
Legal representatives.
Third person.
Joint promisors.

Devolution of joint liabilities

Any of the joint promisors may be

compelled to perform.
A joint promisor compelled to
perform may claim contribution.
Sharing of loss arising from default.
Release of a joint promisor.

Devolution of joint rights

Who can demand performance?

Time and place of performance

Where no application is to be made and no

time is specified.
Where time is specified and no application
is to be made.
Application for a performance on a certain
day and place.
Application by the promisor to promisee to
appoint place.
Performance in manner or at time
prescribed or sanctioned by the promisee.

Reciprocal promises

Mutual & independent

Conditional & dependent
Mutual & concurrent

Rules regarding performance of

reciprocal promises

Simultaneous performance
Order of performance
Effect of one party preventing
another
Effect of default as to promise to be
performed first
To do things legal and other things
illegal

Time as the essence of the

contract
When

When

time is of the essence.

time is not of the

essence.

Subsequent notice

Appropriation of payments

Where the debtor intimates.

Where the debtor does not intimates

& the circumstances are not
indicated.

Where the debtor does not intimate

& creditor falls to appropriate.

Assignment of Contracts

Under certain circumstances, parties may

drop out and bring others in their places.
To assign means to transfer.
An obligation of the party to contract may be
personal or impersonal.
The contract to marry being personal in
nature cannot be assigned, whereas debts of
an individual is impersonal in nature, hence
assignable.

Types of Assignment of contracts

Act of the parties

1.

Assignment of contractual obligations.

Assignment of contractual rights.

2.

Contractual obligations involving personal skills & ability cannot be

assigned.
A promisor cannot assign his liabilities or obligation under a contract.

The rights & the benefits under the contract not involving personal
skills may be assigned.
An actionable claim can always be assigned.

Operation of law

Death
Insolvency

Example - Types of
Assignment

Assignment by act of parties: X owes Y

Rs.1000. X cannot transfer his liability to a
third person. However, if Y agrees to accept
Z as his debtor in place of X, the liability can
then be transferred from X to Z.
Assignment by operation of law: (i) Upon death
of a party, rights & liabilities devolve upon his
heirs & legal representatives. (ii) Upon
insolvency, rights and obligations pass on to
Assignee or Official Receiver.