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Business Environment and Law-Performance And Discharge Of Contracts

Performance And Discharge Of Contracts Introduction

   Posted On :  07.05.2018 10:49 pm

‘Performance of Contracts’ refers to the fulfillment of their respective legal obligations, created under the contract, by both the parties. It is a natural and normal mode of discharging a contract. The various aspects relating to performance are discussed below:

‘Performance of Contracts’ refers to the fulfillment of their respective legal obligations, created under the contract, by both the parties. It is a natural and normal mode of discharging a contract. The various aspects relating to performance are discussed below:
 

A. Actual Performance

 
 
“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 of any other law...”.
Example: X bought goods from Y and promised to pay Rs.1000 to Y on 10th June. X went to Y on 10th June to give Rs.1000 in cash but Y did not accept it. Though X may not be discharged from the payment of Rs.1000, he would not be liable to pay interest thereon from 10th June onwards.
 
For a tender to become legally valid it must fulfill the following conditions:
 
It should be unconditional (Sec. 38): The promisor while offering to perform his promise must do it unconditionally.
Offer must not be of a part only (Sec. 38): The offer must be of whole payment or performance. A creditor is not bound to accept less than what is actually due and would not lose his right to interest on that portion.
Proper time and place (Sec. 38): The offer must be made at a proper time and place.
Able and willing (Sec. 38): “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 there and then to do the whole of what he is bound by his promise to do.”
Reasonable opportunity (Sec. 38): “…If the offer is an offer to deliver anything to the promisee, the promisee must have a reasonable opportunity of seeing that thing offered is the thing which the promisor is bound by this promise to deliver. Thus, buyer must have reasonable opportunity to ascertain that the goods offered are contracted for.
Tender of money: A tender of money must be in legal tender money, and not in any foreign currency, promissory note or cheque’
Joint Promisees: (Sec. 38) “An offer to one of several joint promises has the same legal consequences as an offer to all of them.”

B. Refusal To Perform (Sec.39)


“When a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirely, the promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance.”

C. Who Can Demand Performance?


It is only the promisee who can demand performance of the promise under a contract, for the general rule is that “a person cannot acquire rights under a contract to which he is not a party.”

D. By Whom Contracts Must Be Performed


1. By the promisor himself: (Sec. 40) “If it appears from the nature of the case that it was the intention of the parties to any contract that any promise contained in it, should be performed by the promisor himself, such promise must be performed by the promisor…” Generally where personal skill, taste etc. Are involved, it is presumed that the promisor would himself perform the contract.
2. By promises representative: (Sec. 37) “…Promises bind the representatives of the promisors in the case of death of such promisors before performance, unless a contrary intention appears from the contract”.

Example: A promises to deliver goods to B on a certain day on payment of Rs.10,000. A dies before that day . A’s representatives are bound to deliver the goods to B, and B is bound to pay Rs.10,000 to A’s representatives.

E. Offer To Perform (Tender)(Sec 37)


“A party who has not already performed his obligation must offer to perform the same. (Sec. 38) “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”. Example: A promises to paint a wall for B. A must perform this promise personally.

F. Devolution Of Joint Rights And Joint Liabilities (Joint Promises)


When two or more persons make a joint promise to other or others, they are known as joint promisors e.g. A and B sign a promissory note, they are joint promisors. When a promise is made to two or more persons, they are Joint Promisees. Following rules govern such promises:
 
(1)All promisors must jointly fulfill the promise: (2) Any one of the joint promisors may be compelled to perform: (3) Right of contribution between joint promisors: (4) Effect of release of one joint promisor: Example: A, B and C Jointly promise to pay D Rs. 5000. D may compel either A or B or C to pay him Rs. 5000.

G.Time And Place For Performance


Within a reasonable time: (Sec 46)“Where a promisor is to perform his promise without application by the promisee, and no time for performance is specified, the engagement must be performed within a reasonable time.” “The question what is a reasonable time is, in each particular case, a question of fact.”
During usual hours of business: (Sec.47) “When a promise is to be performed on a certain day, and the promisor has undertaken to perform it without application by the promisee, the promisor may perform it at any time during the usual hours of business on such day and at the place at which the promise ought to be performed.”
Promisee’s duty to apply for performance: (Sec. 46) “When a promise is to be performed on a certain day, and the promisor has not undertaken to perform it without application by the promisee, it is the duty of the promisee to apply for performance at proper place and within the usual hours of business.”
Promisor should apply for fixing a reasonable place: (Sec.49) “When a promise is to be performed with application by the promisor and no place is fixed for the performance of it, 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.”

In the manner prescribed by promisee: (Sec. 50) “The performance of any promise may be made in any manner, or at any time which the promisee prescribes or sanctions.”

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