Performance of contract.

Sec.37 provides that ‘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.’

Thus a contract is said to be performed when the parties to it makes 1.Actual performance or 2. Attempted performance ( tender or offer)

Performance of contract….

Actual performance: A party to a contract is said to have actually performed his promise when he has fulfilled all his obligations under the contract.

When a party to a contract offers to perform his obligations under the contract at proper time and place but the other party does not accept the performance, it is known as attempted performance or a tender. A valid tender is equivalent to actual performance.

Essentials of a valid tender of performance

It must be unconditional It must be for the entire performance The person making the tender must be willing to perform

and in a position to perform. It must be made at proper time and place. It must be made to a proper person i.e. promisee or his

authorized agent. It may be made to any one of several joint promisees. The tender must provide a reasonable opportunity to the

other party. In case of tender of money, the debtor must make a valid

tender in the legal tender money.

Effect of refusal to tender of performance

Where a promisor has made an offer of performance to the promisee, and the offer has not been accepted, the promisor is not responsible for non-performance, nor does he thereby lose his rights under the contract. Sec.38

When the law excuses the non-performance of contract.

When the contract is discharged by any mode ( other than performance )

When promisee neglects to afford reasonable facilities for performance to the promisor. Sec.67

Who should perform the contract

The promisor himself His legal representative His agent A third person, subject to its acceptance by

promisee.

Who can demand performance Promisee, or His legal representative

Time and place of performance

Where no time is specified and no application is to be made- (Sec. 46) the promise must be performed within a reasonable time.

Where time(day) is specified but no application is to be made- (Sec. 47) the promisor may perform it at any time during the usual business hours on such day and the place at which the promise ought to be performed.

Time and place of performance

Where time is specified and application is to be made- (Sec. 48) it is the duty of the promisee to apply for the performance at a proper place and within the usual hours of business.

Where no place is specified and no application is to be made- (sec-49) it is the duty of the promisor to apply to the promisee to appoint a reasonable place for the performance of the promise, and to perform it at such place.

Where manner and time for performance is prescribed by the promisee, then it should be so performed.(Sec.50)

Effect of failure to perform in time

If time is essence of contract it may be avoided for its non performance within that time.

If time is not essence of contract the contract does not become voidable at the option of the promisee, however he has a right to receive compensation for the loss caused to him by the delayed performance.

When time is considered essence of contract

Depends on following…

1. The terms of contract

2. The intention of the parties, which may be gathered from- a) surrounding circumstances, b) nature or the subject matter of the contract, c) construction of the contract.

3. The object the parties had in mind while entering in to contract.

Effect

Failure by promisor to perform in a fixed time when time is essence of contract makes the contract or its unperformed part voidable at the option of the promisee.

Promisee may accept the performance without any objection.

Promisee may accept the performance, after giving a notice to the promisor, for his claim for compensation for damages, if any.

Joint promises

When more than one person constitute a single party to a contract, the promise under the contract is considered a joint promise.

The right to demand performance lies with the promisees jointly. Even a single promisee should not be left out while demanding performance. In case of death of any promisee his legal heirs will take his position.

Exception- surviving partner(s) in a partnership firm.

Performance of a joint promise

All promisors must jointly fulfill the promise. Any one of the joint promisors may be compelled

to perform. Joint promisors are liable to contribute equally.

(Sec.43) Joint promisors are liable to share losses

equally. (exception – principal debtor and surety) Release of one promisor from the liability does

not release the other joint promisors from the obligation.

Reciprocal promises When one party gives promise in consideration of

other party’s promise, both the promises are called reciprocal promises. The forms of which may be following..

Mutual and concurrent promises- where parties have to perform their promises simultaneously at the same time.

Conditional and dependant promises- where performance of promise by one party depends on the prior performance of the other party.

Mutual and independent promises- where one party has to perform his promise independently without waiting for the performance of the other party.

Appropriation of debts Where debtor expressly intimates that the

amount of payment should be applied towards the discharge of a particular debt, the creditor must do so. Appropriation is debtors right.

Where the debtor does not intimate the creditor may apply the payment, at his discretion to any lawful debt actually due and payable to him by the debtor.

Where both the parties fail to appropriate the law will appropriate in order of time.

Assignment of contract

Assignment is transfer of contractual rights and obligations by a party to a contract to other person who is not a party to contract.

Rules - assignment

1. Contracts involving personal skills can not be assigned.

2. An obligation or burden under a contract can not be transferred to a third party unless the other party gives consent to such assignment.

3. An actionable claim can be assigned if the assignment is made in writing. It is also advisable that the assignee gives notice of the assignment to the debtor.

Assignment by operation of law.

Death- to official heirs Insolvency- to Official Receiver or

Assignee.