Unit 4: Performance

• eeaning rformance of a out the obligations ent

  Performance of a out the obligations enterformance of a out the obligations ent
• Types of Contact


  • Actual (sec. 37)
  • Tender of Performance (sec. 38)
• Actual

  • When all the parties fulfilled their obligation under the contract
• Tender of Performance


  • Promisor offers to perform his obligation under the contact at the proper time and place but the premise the performance refuses to accept
• Condition to be satisfied for a valid contract

  • Must be conditional
  • Must be made at proper time and place
  • Reasonable opportunity to examine goods
  • Must be for whole obligation
  • Must be duly made to the promisee or his authorised agent
  • Tender must be of exact amount and in legal tender
• Who can perform the contract

  • Promisor himself
  • Agent
  • Legal Representative
  • Third persons (Sec. 41)
• Performance of joint promises

  1. Devolution of joint liabilities (obligations to perform joint promises)

  2. Anyone of the joint promisors may be compelled to perform and pay

  3. Right of contribution

  4. Release of joint promisor

  5. Devolution of joint rights
• Time, place and manner of performance

  • Time for performance of promise
  • Time and place for performance of promise
  • Application for performance
  • Place for the performance of promise
  • Performance in prescribed manner
• Reciprocal promise


  A promise in return for a promise
• Types of reciprocal promises

  • Mutual & Dependent
  • Mutual & Independent
  • Mutual & Concurrent
• Reciprocal promises cannot include things that are illegal
• Appropriation of payment


  When a debtor owes several debts to the same creditor and makes payments which is not sufficient to discharge all the debts, the payment is appropriated (adjusted against the debts) as per the Contract Act 1872
• Rules for appropriation of payment

  • Appropriation by Debtor
  • Appropriation by Creditor
• Appropriation of payment


  When a debtor owes several debts to the same creditor and makes a payment that is not sufficient to discharge all the debts, the payment is appropriated (adjusted) as the debtor or creditor directs
• Appropriation of payment rules

  1. Rule #1: Appropriation by debtor if they express intimation

  2. Rule #2: Appropriation by creditor if no intimation by debtor

  3. Rule #3: If debts are equal, payment is applied appropriately
• Impossibility of performance


  When the performance of a contract becomes impossible, the contract may be void
• Types of impossibility


  • Existing impossibility (known or unknown to parties)
  • Supervening impossibility (unexpected circumstances make performance illegal or impossible)
• Discharge of contracts


  1. Performance

  2. Mutual consent (novation, rescission, alteration, remission, waiver)

  3. Merger

  4. Impossibility (destruction of subject matter, death/disability, subsequent illegality, non-existence of state of things)

  5. Operation of law (death, insolvency, merger, unauthorized alteration of written contract)

  6. Breach (anticipatory, actual)
• Contracts which need not be performed
• Situations where contracts need not be performed

  • Parties mutually agree to substitute or rescind original contract
  • Promisee dispenses with or remits the promise
  • Person at whose option the contract is voidable rescinds it
  • Promisee neglects or refuses to afford promisor reasonable facilities for performance
  • Contract is illegal