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Performance and Discharge of Contract

(Section 37-67)

The most natural and usual mode


of discharging a contract is to
perform it in accordance with its
terms.

Performance of contract means that


both the parties - promisor and the
promisee have fulfilled their
respective
obligations,
which
the
contract placed upon them. (Sec. 37)
Case: A visits a stationery shop to
buy a calculator. The seller delivers
the instrument and A pays the
price. The contract is said to have
discharged
by
mutual
performance.

Types of Performance

Performance may be actual or attempted.


Actual Performance. When a promisor to a
contract has fulfilled his obligation in accordance
with the terms of the contract, the promise is said to
have been actually performed. Actual performance
gives a discharge to the contract and the liability of
the promisor ceases to exist.
A agrees to deliver 10 bags of cement at Bs
factory and B promises to pay the price on
delivery. A delivers the cement on the due date
and B makes the payment.

Attempted Performance. When the performance has


become due, it is sometimes sufficient if the promisor
offers to perform his obligation under the contract. This
offer is known as attempted performance or more
commonly as tender. Thus, tender is an offer of
performance, naturally, complies with the terms of the
contract. If goods are tendered by the seller and refused
by the buyer, the seller is discharged from further liability,
given that the goods are in accordance with the contract
as to quantity and quality and he may sue the buyer for
breach of contract if he so desires.
(Sec.38)
A contracts to deliver to B at his warehouse, on
March 6, 2004, 100 tons of basmati rice. A takes the
goods to Bs place on the due date during business
hours, but B, without assigning any good reason,
refuses to take the delivery. Here, A has performed
what he was required to perform under the
contract. It is a case of tender of performance and A

To be a valid tender or offer of performance, it


must fulfil the following conditions:
(i) It must be unconditional [Sec. 38(1)].
(ii) It must be made at a proper time and place
[Sec. 38(2)].
(iii)
It must be made under such circumstances
that the person to whom it is made may have a
reasonable opportunity of ascertaining that the
person by whom it is made is able and willing, and
then do the whole of what he is bound by his
promise to do [Section 38(2)].
(iv) If the offer is an offer to deliver anything to
the promisee, the promisee must have a
reasonable opportunity of seeing that the thing
offered is the thing that the promisor is bound by
his promise to deliver [Sec. 38(3)].

BY WHOM CAN CONTRACTS BE PERFORMED?

1. Promisor himself. If it appears from the nature of


the any case that it was the intention of the contracting
parties to any contract that any promise contained in it
the contract should be performed by the promisor
himself, such a promise must be performed by the
promisor himself. [Sec. 40]
2. Agent. Where personal consideration is not the
subject matter of the contract, the promisor or his
representatives may employ a competent person to
perform it. [Section 40].
A promises to pay B a sum of money. A may
perform this promise, either by personally paying
the money to B or by causing it to be paid to B by
another; and, if A dies before the time appointed
for payment, his representatives must perform the
promise, or they may employ some proper person
to do so.

3. Legal Representative. by the representatives.


Promises bind the representatives of the promisors,
including in case of the death of such promisors before
performance, unless a contrary intention an exemption
to that effect is stated in the appears from the contract
itself. However, contracts of personal nature, it comes
to an end should the promisor dies and therefore such
contracts cannot be performed
4.Third
person.
When
a
promisee
accepts
performance of the promise from a third person, he
cannot afterwards enforce it against the promisor.
[Sec. 41]
5. Joint Promisors. When two or more persons have
made a joint promise, then, unless a contrary intention
appears by the contract, all such persons, during their
joint lives, and, after the death of any of them, his
representative jointly with the survivor or survivors,
and, after the death of the last survivor, the

WHO CAN DEMAND PERFORMANCE?


Ordinarily, it is only the promisee who can demand performance of
the promise under a contract. This is simply because a stranger to
contract cannot sue and the person who can demand performance
is the party to whom the promise is made. In other words a third
party cannot demand performance of the contract even if it was
made for his benefit. A promises B to carve the statute of C, father
of B. The person who can demand performance is B and not C.
In the event of the death of the promisee, his legal representative
can demand performance unless a contrary intention appears In the
contract. However, this is not possible if the contract is of personal
nature.
[Section 37]
Moreover, in case of a joint promise, the promisee may, in the
absence of express agreement to the contrary, compel any one or
more of the joint promisors to perform the entire promise. [Section 43]

The time and place of performance are the matters to be


determined by agreement between the parties to the contact.
General rules regarding the same are as under:
Where no time is specified: A contract is not bad for want of
certainty if time for performance is not stated. Where the time for
performance is not specified in the contract, the promise must be
performed within a reasonable time. The question "What is a
reasonable time is, in each particular case, a question of fact.
(Sec. 46)
Where time is specified: When a contract specifies the time and
place for its performance, the parties must perform accordingly.
But, when the contract is to be performed on a certain day, and
the promisor has undertaken to perform without a request from
the promisee, he may perform it at any time during the usual
business hours on that day at the specified place.
(Sec. 47)

PERFORMANCE OF RECIPROCAL PROMISES:


LEGAL RULES
1. Promisor not bound to perform unless promisee
ready and willing A Promisor is not bound to perform,
unless the promisee reciprocates and is ready and willing
to perform his part of the contract. [Sec. 51]
A and B contract that A shall deliver goods to B to be
paid for by B on delivery. A need not deliver the goods,
unless B expresses readiness and willing to pay for the
goods on delivery. B need not pay for the goods, unless A
is ready and willing to deliver them on payment.

2. Order of performance of reciprocal promises.


Where the order in which reciprocal promises are to be
performed is expressly fixed by the contract, they shall be
performed in that order; and, where the order is not
expressly fixed by the contract, they shall be performed in
that order which the nature of the transaction requires.
[Sec. 52]

3. Liability of party preventing event on which


the contract is to take effect. When a contract
contains reciprocal promises, and one party to the
contract prevents the other from performing his promise,
the contract becomes voidable at the option of the party
so prevented; and it is entitled to compensation from the
other party for any loss which it may sustain in
consequence of the non-performance of the contract.
[Sec.53]
A and B contract that B shall execute certain work
for A for Rs 1,000. B is ready and willing to
execute the work accordingly, but A prevents him
from doing so. The contract is voidable at the
option of B; and, if he decides to rescind it, he is
entitled to recover compensation from A for any
loss which he has incurred due to the non-

4.Effect of default as to that promise which


should be first performed. When a contract
consists of reciprocal promises, such that one of them
cannot be performed, or that its performance cannot be
claimed till the other has been performed, and the promisor
of the promise last mentioned fails to perform it, such
promisor cannot claim the performance of the reciprocal
promise, and must make compensation to the other party
to the contract for any loss which it may sustain by the nonperformance of the contract.
[Sec. 54]
A hires B's ship to dispatch a cargo from Kolkata to
Mauritius. The cargo is to be provided by A, while B
is to receive a certain freight for its conveyance. A
does not provide any cargo for the ship. A cannot
claim the performance of B's promise, and must
make compensation to B for the loss which B

Discharge of a contract: implies termination of


contractual obligations. This is because when
the parties originally entered into the contract,
the rights and duties in terms of contractual
obligations were set up. Consequently when
those rights and duties are put out then the
contract is said to have been discharged. Once
a contract stands discharged, parties to it are
no more liable even though the obligations
under the contract remain uncompleted.

Novation or Alternation of Contract.


The term novation implies the substitution of a
new
contract
for the original one. This
arrangement may be either between the same
parties or between different parties. For a
novation to be valid and effective, the consent
of all the parties, including the new one(s), if
any, is essential. Moreover, the subsequent or
second agreement must be one capable of
enforcement in law, the consideration for
which is the exchange of promises not to
enforce the original contract. (Sec.62)