Chapter-10: Performance of Contract

Chapter- 10
Performance of Contract
# Introduction:
Performance of contract means fulfilling of their respective legal obligation created under the
contract by both the promisor and the promisee. It is the next step after the formation of the
contract. Performance by all the parties of the respective obligations is the normal and natural
mode of discharging or terminating a contract.
The law even after formation of contracts, distinguishes those contracts into two categories:
i) Contracts which must be performed.
ii) Contracts which need not be performed.
Section 37 of Contract Act 1872 says,

The parties to a contract must either perform or offer to perform their respective promise, unless
such performance is dispensed with or excused under the provisions of this Act, or of any other
law.
Promises to bind the representatives of the promisors in case of the death of such promisors
before performances unless a contrary intention appears from the contract.
Section 38 further specifies that,

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.
Accordingly, after entering into a contract two options of the same dimension are open to the
parties to a contract, which are,
i) The parties to a contract must either perform.
ii) Offer to perform, their respective promises.

The law declares that even the parties need not to do any of the above things, if such
performance is dispensed with or excused under the Act or any other law.
Thus, the law talks about actual performance and tender performance. That a person after
entering into a contract either has to perform his obligation or at least offer to perform his
obligation unless that is excused otherwise by law. Offer to perform here has been made equal to
actual performance, because sometimes it may happen that a party to a contract offering his part
of performance but the other party to a contract is not accepting it. In fact, in such cases, the
person who could not perform it actually due to the fault of another party should not be made
liable for non-performance. Such an offer to perform is in fact an alternative way of being
discharged from one's contractual obligation as this same is possible by actual performance. Such
an offer of performance is also technically known as 'tender of performance'.
# A tender of performance must fulfil the following conditions, to be legally valid: Section
38
a. Nature of the offer of performance- A tender must be unconditional and so if the
promisor in making such an offer adds any type of condition with it then it will fail to be
a valid offer of performance as required by section 38 to enjoy the legal benefits.
b. Conditional performance- A tender to pay conditionally upon the other party doing
something such as giving release or accepting the other amount in full satisfaction of all
demands, is not a valid tender.
c. Money- A tender money must be legal tender money, not by any foreign money, or by
promissory note or cheque.
d. Time and place of the offer- The tender must be made at a proper time and place. Proper
time and place depend upon the intention of the parties and the provision of section 46-
50. The tender before the due date or at a time and place other than that agreed upon, is
not a valid tender.
e. Opportunity to check promisor- The person to whom a tender is made must be given a
reasonable opportunity of ascertaining that the person by whom it was made is able and
willing there and then, to do the whole promised obligation.
f. Part-performance- An offer to perform a part of the promise is not a valid tender.
g. Opportunity to check the goods- If the offer is an offer to deliver anything to the
promise, the promisee must have a reasonable opportunity of seeing that the thing offered
is the thing which the promisor is bound by his promise to deliver.
h. More than one promise- When there are several promises an offer to perform any one of
them is a valid tender.
# Connected to Section- 37 & 38:
# Effect of refusal to perform a promise wholly by a promisor (Anticipatory breach of
contract):
When a party to a contract has refused to perform, or disable himself from performing his
promise in its entirety, within stipulated or my reasonable time, then after the expiry of that time,
it may put an end A to the contract, unless he has signed by words or conduct, his acceptance in
its continuance.
# Effect of refusal of accepting a properly made offer of performance or tender:

Where the promisor has made an offer of performance to the promisee and the offer has not been
accepted by the promisee, the contract is deemed to be broken by the promisee and he can be
sued for breach of contract.
# Who can demand performance?

As a general rule, it is only the promisee who can demand performance of the promise under a
contract. A third party cannot demand performance of the contract even if it was made for his
benefit. In case of death of the promisee, his legal representatives are entitled to enforce the
performance of the contract against the promisor.
# Who must perform the contract?

a. By the promisor himself- In the case of a contract interpersonal nature, for instance a
contract of sale of goods or a contract to lend a sum of money, the promisor himself or
his agent may perform the contract.
b. By the legal representatives- In case of the death of the promisor before performance,
the liability of performance falls on his legal representatives, unless a contrary intention
appears from the contract.
c. Performance by a third person (Section 41)- If a promisee accepts performance of the

promise from a third person, he cannot afterwards enforce it against the promisor.
d. Performance of Joint promises- Joint promises may take any of the following shapes,
1. Several joint promisors make a promise with a single promisee.

2. A single promisor makes a promise with several joint promisee.
3. Several joint promisors make a promise with several joint promisees.
# Who can demand performance of joint promises? (Section 45)
When all the joint promisees are alive, the right to claim performance rests with all of them
jointly and a single promisee cannot claim performance. On the death of any promisee, the right
claim rests with the promisees legal representatives along with the surviving promisees Payment
to one of the several promisees does of operate as a complete discharge of the debt.
For instance,
A in consideration of TK 5000 lent to him by B & C, promises B & C jointly to repay them the
sum with interest on a day specified B dies. The right to claim performance rests with B's
representatives jointly with C during C's life and after the death of C with the representatives of
B & C jointly.
# Who must perform the joint promises? (Section 42-44)

1. All promisors must jointly fulfil the promise.
2. Any one or more of joint promisors may be compelled to perform.
3. Right of compelling contribution from joint promisors.
For instance,
If A is compelled to pay the entire amount of TK 3000, he can realize from B and C, TK
1000 each.
4. Sharing of loss by default in contribution.
# Alternative promise, one branch being illegal:

Section 58 states that, In the case of an alternative promise, one branch of which is legal and the
other illegal, the legal branch alone can be enforced."
For instance,
A and B agree that A shall pay B TK1,000, for which B shall afterwards deliver to A either rice
or smuggled opium. This is a valid contract to deliver rice, and a void agreement as to the opium.
# Contracts which need not be performed:
Sections 62-67 lists down the contracts which need not be performed as follows:
A. If there is Novation', 'Rescission' or 'Alteration' by mutual agreement between the parties,
the original contract need not be performed (Section 62).
B. The above rule applies in cases of Remission as well (Section 63).
C. When a voidable contract is rescinded, the other party need not perform his promise
(Section 64).
D. According to section 67, 'If any promisee neglects or refuses to afford the promisor
reasonable facilities for the performance of his promise, the promisor is excused by such
neglect or refusal as to any non-performance caused thereby.
For instance,
A contract with B to repair B's house. B neglects or refuses to point out to A the places in
which his house requires repair. A is excused for the non-performance of the contract if it
is caused by such neglector refusal.

Chapter-10: Performance of Contract

Uploaded by

Copyright:

Available Formats

Chapter-10: Performance of Contract

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Chapter-10: Performance of Contract

Uploaded by

Copyright:

Available Formats

Chapter- 10

i) Contracts which must be performed.

ii) Contracts which need not be performed.

Section 37 of Contract Act 1872 says,

Section 38 further specifies that,

i) The parties to a contract must either perform.

ii) Offer to perform, their respective promises.

f. Part-performance- An offer to perform a part of the promise is not a valid tender.

# Effect of refusal of accepting a properly made offer of performance or tender:

# Who can demand performance?

# Who must perform the contract?

c. Performance by a third person (Section 41)- If a promisee accepts performance of the

1. Several joint promisors make a promise with a single promisee.

# Who must perform the joint promises? (Section 42-44)

4. Sharing of loss by default in contribution.

# Alternative promise, one branch being illegal:

B. The above rule applies in cases of Remission as well (Section 63).

You might also like