performance of contract (4)

Performance of contract. Sec.37 provides that ‘the parties to a contract must either perform, or offer to perform, 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. or 2. Attempted performance ( tender or offer) 

Performance of contract….  Actual performance 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   

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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

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When the law excuses the nonperformance of contract. 

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

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

Who should perform the contract 

The promisor himself 

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His legal representative

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His agent

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A third person, subject to its acceptance by promisee.

Who can demand performance p erformance 

Promisee, or 

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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.

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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.

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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…

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The terms of contract

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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.

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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.

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Promisee may accept the performance without any objection.

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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 si ngle 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 

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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 o ther 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.

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

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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.

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

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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

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Insolvency- to Official Receiver or  Assignee.