Performance of Contract

 

GENERAL RULE

A contract being an agreement enforceable by law, the parties are not absolved of their obligations until the contract has been discharged and the most common way of the discharge of contractual obligation is by performance of the contract by the parties to it. Chapter IV of the Contract Act deals with the performance of contracts. Section 37 which is the first section under this Chapter lays down the general rule,-

That the parties to a contract must perform or offer to perform, their respective promises, unless such performance is dispensed with or excused under the provisions of this Act or any other law.

Thus the general rule is that the parties must perform their respective promises under the contract but in exceptional cases the performance may be dispensed with or the parties may be executed from the performance of their promises

BY WHOM CONTRACTS MUST BE PERFORMED

  1. By Promisor himself or his representative:

Section 40 of the Contract Act provides: “if it appears from the nature of the case that it was the intention of the parties to any contract that any promise contained should be performed by the promisor himself, such promise must be performed by the promisor.

In other cases the promisor or his representatives may employ a competent person to perform it”.

Effect of the acceptance of performance from third person:

In case a promise accepts promise from third person, the promisor is discharged from his responsibility and hence the promise cannot afterwards enforce the contract against the promisor”.

  1. 2. Devolution of joint liabilities

When the promise is made jointly by two or more than two persons, all the said persons must fulfill the promise during their joint lives. In case anyone of them dies then the promise must be performed by his representative jointly with the survivors, as the case may be. In case all the promisors die before the performance, the promise must be performed jointly by their representatives.

  1. Anyone of joint promisors may be compelled to perform –

Section 43 of the Contract Act provides, “When two or more persons make a joint promise, the promisee may, in the absence of express agreement to the contrary, compel anyone or more of such joint promisors to perform the whole of the promise”. If anyone of the two or more joint promisors make default in such contribution, the remaining joint promisors must bear the loss arising from such default in equal shares.

But as provided in explanation to Section 43

Nothing in this section shall prevent a surety from recovering from his principal payments made by the surety on behalf of the principal, or entitle the principal to recover anything from the surety on account of payments made by the principal.

EFFECT OF RELESE OF ONE JOINT PROMISOR

Section 44 lays down two main things. In the first place, the release of one joint promisor does not release the other joint promisor or promisors, as the case may be, from the responsibility under the contract. Even if the promisee releases one of the joint promisors from his responsibility under the contract, nevertheless he still remains responsible to other joint promisors.

DEVOLUTION OF JOINT RIGHTS

When a person has made a promise to two or more persons jointly, then, unless a contrary intention appears from the contract, the right to claim performance rests, as between him and them, during their joint lives, and after the death of any of them with the representative of such deceased person jointly with the survivor or survivors, and after the death of the last survivor, with the representatives of all jointly.

TIME AND PLACE FOR PERFORMANCE

  1. Where no time specified and no application is to be made:-

Section 46 of the Contract Act provides: “Where, by the contract, a promisor is to perform his promise without application by the promisee and no time for performance is specified the agreement must be performed within a reasonable time”.

Explanation to Section 46 add that the question: “what is a reasonable time” is in each particular case, a question of fact

  1. Time and place of performance where time is specified but an application is to be made:-

Section 47 provides: “ when a promise is to be performed on a certain day, and the promisor has undertaken to perform it without application ny 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”.

  1. When performance to be made on certain day at proper time and place – Duty of promisee to apply for performance

Section 48 of the Act provides, “When a promise is to be performed on a certain day, and thepromisor has not undertaken” to perform it without application by the promisee, it is the duty of the promisee to apply for performance at a proper place and within the usual hours of business”.

Explanation – What is a proper time and place is in each particular case, a question of fact.

  1. Where no place fixed and no application to be made for performance – Duty of promisor to apply to promisee to appoint place:-

When a promise is to be performed without application by the promisee 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.

  1. Performance to be in manner or at time prescribed or sanctioned by the promisee –

Section 50 lays down that – The promisor is bound to perform the promise in any manner, or at any time which the promisee prescribes or sanctions.

Consequence of failure to perform at fixed time in a contract in which time is essential –

Section 55 provides that “When a party to a contract promises to do a certain thing at or before a specified time, or certain things at o before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be the essence of the contract”.

Thus in a contract wherein time is essential, the contract becomes voidable at the option of the promisee in case it has not been performed before the time specified. But whether time is the essence of the contract depends upon the intention of the parties and also on the nature of the contract.

In cases of sale of immovable property, the general presumptions that time is not the essence of the contract. In Mangalra, Namasudra vs. Permanand Namsudra, wherein the contract was relating to the sale of land, the Assam and Nagaland High Court while holding “time was not the essence of the contract” observed:

Mere incorporation in the written agreement of a clause imposing penalty in case of default does not by itself evidence an intention to make time the essence of the contract.

 

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