Performance of Contract

Performance Of
Contracts
Rakesh Kumar (Haryana School of Business, Hisar) Peter F. Drucker
Performance:
According to section 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 provision of this act or any
other law.

Performance of Contract
Covers:
• Obligation of parties to the contract.
• Effect of refusal to accept offer of
performance.
• Identity of performer.
• Time and place of performance.
• Performance of reciprocal promises.
• Appropriation of payments.
Obligation of Parties to
Contracts
Performance of Contract takes place when

the parties to the contract fulfill their
obligation arising under it within the time
and in the manner prescribed in the
contract.

Obligation of Parties to Contracts
Ways of Performance
• Actual Performance
• Attempted Performance

Actual Performance
When each party to a contract fulfilled

his obligation(s) under the contract.

Attempted Performance
When a person who is bound under

contract by law to perform certain act,
informs the promisee of his intention
to perform his obligation.

Kinds of Tender
• Tender of goods.
• Tender of money.

Essentials of Valid tender

• Unconditional.
• Proper time and place.
• Reasonable opportunity for verification
for promisee.
• Offer to perform in full.
• Legal.
Effects of Refusal of Party to
perform wholly
When a party to 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.
perform wholly
Contracts which need not be

performed.
• When performance of contract become
impossible.(Section 56).
• When there is an agreement b/w the
parties to a contract to substitute a new
contract for it. (Section 62).

perform wholly

performed.
•When every promisee may dispense with
or remit, wholly or in part, the performance
of the promise made to him, or may extend
the time of such performance, or may
accept instead of it any satisfaction which
he thinks fit. (Section 63).
perform wholly

performed.
•When a person, at whose option a contract
is voidable, rescinds it, the other party
thereto need not perform any promise
contained therein in which he is promisor.
(Section 64).

perform wholly

performed.
•If any promise neglects or refuses to afford
the promisor reasonable facilities for
performance of his promise, the promisor is
excused by such neglect or refusal as to
non-performance caused thereby.

Identity of Performer
• By whom Contract must performed.
• Joint Promise and its Performance.

By Whom Contracts must be
Performed:
• Performance by promiser himself.
• Performance by the agent of promisor.
• Performance by legal representative.
• Performance by third party.

Performance by himself
involves exercise of:
• Personal skills of promisor.
• Experience of promisor.
• Diligence of promisor.

Performance by heir of
promisor
• On the death of promisor.

• Limited to the value of property that he/she
has inherited from the deceased.

Joint Promise and Its Performance
• Devolution of joint liabilities.
• Any one of joint promisors may be compelled
to perform.
• Each promisor may compel contribution from
other joint promisors.
• Sharing of loss by default in contribution.
• Effect of release of one of joint promisors.
Rights of joint Promisees
• According to section 45
– All the joint promisees have right to claim the
performance of promise.
– When one of the joint promisees dies, the right
to claim performance rest with his legal
representative jointly with surviving promisees.
Time and Place of Performance
• Where no application is to be made and no
time is specified.
• Where time is specified.
• When application is to made by promisee for
performance on a certain day.
• Application by promisor when no place is
fixed for performance.
• Performance in manner or at time
prescribed by promisee.
Time and Place of Performance
Time as Essence of Contract
• When parties have agreed on a finite time to

complete the contract.
• When intention of the parties is to give due
importance to time and stick to the schedule of
contract.

Performance of Reciprocal
Promises
• Mutual and Concurrent Promises.
• Mutual and independent Promises.
• Conditional and Dependent Promises.

Promises
Order of Performance of
Reciprocal Promises
• Where reciprocal promises need to be
performed at the same time
• Order of performance of reciprocal promises.
• One party preventing the other from performing.
• Effect of default as to promise which should be
performed first.

Promises
Reciprocal Promise Regarding
Impossible Acts
• An agreement of performance of
impossible act is void.
• A contract to do something which has
become impossible after the contract is
made.

Performance of Reciprocal Promises
Reciprocal promises and Illegal acts
• According to Section 57
– Where parties reciprocally promises, firstly to
do certain things which are legal, and
secondly, under specified circumstances, to
do certain things which are illegal, the first set
of promises is a contract, but the second is a
void agreement.

Performance of reciprocal promises.
Alternative Promise-one branch being
illegal
• According to Section 58
– In the case of alternative promise, one branch
of which is legal and the other is illegal, the
legal branch alone can be enforced.

Appropriation of payments
• Appropriation according to intimation by
debtor.
• Appropriation in the absence of intimation.
• Appropriation in order and the
proportionate appropriation.

Appropriation according to
intimation by debtor.
– If debtor owes several debts to a creditor, and
makes a payment either with an express
intimation, or under circumstances implying
that the payment is to be applied to the
discharge of some particular debt, if accepted
must be applied accordingly.

Appropriation in the absence of

intimation.
– When debtor does not expressly intimate and the circumstances
of the payment do not indicate any intention on the part of the
debtor, the creditor may appropriate the amount of any lawful
debt actually due and payable to him by debtor. The creditor
cannot, however, appropriate the payment made by the debtor to
a disputed or unlawful debt, but may apply it to a debt which is
barred by law of limitation.

Appropriation in order and the

proportionate appropriation.
– When neither party makes any appropriation the
payment shall be applied in discharge of debts in
order of time, whether they are (not) barred by law in
force for the time being as to the limitation of suits. If
the debt are of equal standing, the payment shall be
applied in discharge of each proportionably.

Thank You

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Performance Of

The parties to a contract must either perform or

Rakesh Kumar (Haryana School of Business, Hisar) Peter F. Drucker