Presentation on theme: "PERFORMANCE OF CONTRACTS"— Presentation transcript:
1 PERFORMANCE OF CONTRACTS A contract creates legal obligations ,"Performance of a contract" means the carrying out of these obligations. Each party must perform or offer to perform the promise which he has made. Section 37, Para 1, of the Contract Act lays down that, "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, or of any other law.”The Offer to Perform or TenderIt must be unconditional. A tender coupled with a condition is no tender.A tender to pay conditionally upon the other party doing something such as giving a release or accepting the other amount in full satisfaction of all demands, is not a valid tender. But 'of course, a receipt may be demanded after a tender has been accepted.A tender money, must be in legal tender money, not by any foreign money, or by promissory note or cheque.the tender must be made at a proper time and place.The person to whom a tender is made must be given 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.The reason behind the above rule is that an offer-to perform a -part of the promise is not a valid tender.If the offer is an offer to deliver anything to the promisee, 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.When there are several promisees, an offer, to any one of ,them is a valid tender.
2 PERFORMANCE OF CONTRACTS Effect of refusal to accept a properly made offer of performance or TenderEffect of refusal of. party to perform promise whollyWHOM IS A CONTRACT TO BE PERFORMED?1.Personal Performance2.Performance by representatives3.Effect of Performance from a third person4.deatth of the Promisor5. Performance of Joint Promises - See below.Who can demand performance ?The promisee can demand performance of the promise. A stranger to a contract, i.e., one who is not a party to it, cannot file a suit to enforce it. A contract between P and Q cannot be enforced by R.Under certain cases a stranger to the contract can enforce the contract. Examples, Trust, Assignee ...etc.The legal representatives can enforce performance of the contract upon the other party or parties and their legal representatives.
3 PERFORMANCE OF CONTRACTS DEVOLUTION OF JOINT RIGHTS AND LIABILITIESJoint Performance1.Devolution of joint liabilities2. Any one of joint promisor may be compelled to performEach promisor may compel contributionSharing of loss by default in contribution3.Effect of release of one joint promisor4. Devolution of joint rightsRECIPROCAL PROMISESA Contract consists of reciprocal promises when one party . makes a promise (to do or not to do something in the future) in consideration of a similar promise (to do or not to do' something in the future) made by the other party. Such a contract is an exchange of promises.RulesI. Promisor not bound to perform, unless reciprocal promisee ready and willing to perform2. Order of performance of reciprocal promises3. Liability of party preventing event on which contract is to take effect4. Effect of default as to that promise which should be first performed in contract consisting of reciprocal promises5. Reciprocal promises to do things legal and also other things illegal .6. Agreement to do impossible act
4 PERFORMANCE OF CONTRACTS CONTRACTS WHICH NEED NOT BE PERFORMEDSections 62 to 67 of the Contract Act are listed under the heading "Contracts which need not be performed". The relevant provisions are as follows :If by mutual agreement there is Novation, Rescission or Alteration, the original contract need not be performed. (Sec. 62.The same rule applies in cases of Remission. (Sec. 63)When a voidable contract is rescinded, the other party need not perform his promise. (Sec. 64.)If the 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 nonperformance caused thereby." Sec. 67.Under the Law of Contract the following agreements need not be performed :Unlawful consideration and object-Sec. 23Where the performance is unlawful or illegal-Sec. 56ASSIGNMENT OF CONTRACTSDefinitionAssignment means transfer. The rights and liabilities of a party to a contract can be assigned under certain circumstances.Assignment may occurby act of parties orby operation of law.
5 PERFORMANCE OF CONTRACTS RulesThe rules regarding assignment of contracts are summarised below :Contracts involving personal skill, ability, credit or other personal qualifications, cannot be assigned.The obligations under a contract, i.e., the burden and the liabilities under the contract cannot be transferred.A contract may be performed through the agency of a competent person, if the contract does not contemplate performance by the promisor personally.-Sec. 40.The rights and benefits under a contract (not involving personal skill or volition) can be assigned.The rights of a party under a contract may amount to an "actionable claim" or "a chose-in-action".Assignment by operation of law occurs in cases of death or insolvency.THE TIME AND PLACE OF PERFORMANCEGeneral RulesThe time and the place of performance of a contract are matters to be determined by agreement between the parties to the contract.- In sections 46 to 50 of the Indian Contract Act certain general rules have been laid down regarding the time and place of performance. They are as followsTime for performance without applicationtime and. place, where time is specifiedApplication for performance to be at proper time and placeto appoint A reasonable place for the performance.manner and time prescribed or sanctioned by promisee
6 PERFORMANCE OF CONTRACTS PERFORMANCE WITHIN STIPULATED TIMERulesSection 55 of the Contract Act lays down certain rules ,regarding the effects of failure to perform a contract within the stipulated time. They are as follows :In contracts where time is of the essence of the contract, if there is failure to perform within the fixed time, the contract (or so much of it as remains unperformed) becomes voidable at the option of the promisee.In such cases, the promisee may accept performance after the fixed time but if he does so he cannot claim compensation unless he gives notice of his intention to claim compensation at the time of accepting the delayed performance.In contracts where time is -not of the essence of the contract, failure to perform within the, fixed time does not make the contract voidable, but the promisee is entitled to get compensation for any loss occasioned to him by such failure.
7 PERFORMANCE OF CONTRACTS Case LawThe decisions of the Supreme Court, regarding the `time’ of the performance of summarised below contracts, are summarised below .The fixation of the period within which the contract hasThe question whether or not time was of the essence of the contract would essentially be a question of the intention of . The parties, to be gathered from the terms of the contract.Even if a contract expressly lays emphasis on time as the essence of the contract, the condition will be dependent on other provisions of the contract.When a contract relates to sale of immovable property , it will normally be presumed that the time is not the essence of the contract.In mercantile contracts, the time of delivery of goods is of the essence of the contract but not the time of the payment of the price.RULES REGARDING APPROPRIATION OF PAYMENTS1. Express appropriation by -Debtor2: Implied appropriation by Debtor3. Principal and Interest when both due4. Appropriation by Creditors5. Order of appropriation6. The rule in re Hallett's estate