What is Performance of Contract and when the contract is valid? It is a legal compulsion that it must be performed by the contracting parties.
The performance of contract means that all the contracting parties must fulfil their part of an obligation imposed on them by law through a contract.
When all the contracting parties have performed their part of contract, the contract comes to an end positively.
Section 37 of The Contract Act is relevant to the performance of contract and says 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.
Promises bind the representatives of the promisors in case of the death of such promisors before the performance, unless a contrary intention appears from the contract.
See Also: What is Quasi Contract
Illustration. X promises to deliver goods to Y on a certain day on payment of $1000. X dies before that day. X’s representatives are bound to deliver the goods to Y and Y is bound to pay $1000 to X’s representatives.
Rules of Performance of Contract
The following are the rules with regard to the performance of the contract:
Who can demand Performance
According to The Contract Act, the actual promisee can only demand the performance of contract and the third person cannot demand the performance of the contract even though the contract may be for his benefits.
In case of death of the promisee, his legal representative can also demand the performance of contract.
Illustration:
X promises Y to pay a sum of $10000 to Z. In this promise, Y can demand the performance of contract and Z cannot demand the performance of the contract.
Even though the contract is for Z’s benefit if X refuses to perform contract, the Y can take action against X and cannot do so.
See Also: What is Contingent Contract
Who can perform contract
When the performance of the contract depends on the personal skill and qualifications of the promisor.
The promisor himself is personally responsible for the performance of the contract and nobody else can perform on his behalf.
In all other cases where his personal skill and qualifications are not required, the promisor or his agent or any third party (if allowed by promisee) can perform the contract.
In case of death of the promisor, the legal representatives of the promisor are also bound to perform the contract.
Illustration:
A promise to paint a picture for B. A must perform this contract personally.
Illustration.
A doctor promises with B to operate him for his disease against a fee of $50000, B pays the fee. Now A is bound to perform the contract himself because it depends on his personal skill.
Illustration:
A promise to sell 1000 units of his product to B for $100 per unit B pays the amount due. Now A can say to his agent C to hand over the 1000 units of his product to B.
If A dies before the performance of the contract, then his legal representative D who is A’s son can perform the contract.
When Time for performance is not Fixed
When the time for the performance of the contract is not specified and fixed and it is on the promisor to perform the contract without the applications by the promisee.
See Also: What is Void Contract
The promisor is bound to perform the contract within in a reasonable time. What is a reasonable time is a question of fact depends on each particular case. (Section 46)
Illustration
A sell his bicycle to B for but the time for the performance is not specified. It is necessary A to handover bicycle to B when payment is made by B.
When Time is Fixed
When the contract is to be performed on a certain day, and the promisor has undertaken to perform it without application by the promisee.
The promisor may perform it at any time during the usual business hours on such day.
When the time for the performance is mentioned and promisor does not perform the contract during the usual business hours in that day. It is assumed that contract has not been performed section 47.
See Also: What is Voidable Contract
Illustration
A promise to deliver goods to B’s warehouse on the 1st January. On that day A brings the goods to B’s warehouse during usual business hours. It is said that the contract has been performed.
Illustration
In an above illustration if A delivers the goods to B’s warehouse on the same day but after usual hours for closing the business and they are not received. It will be assumed that contract has not been performed by the promisor.
When Application is Required
When a promise is to be performed on a certain day on the application of the promisee for the performance.
It is the duty of the promisee to apply for performance at a proper place and during usual hours of business.
Until the application for the performance of the contract is not made by the promisee, the promisor is not bound to perform the contract. (Section 48)
Illustration:
A promise to deliver his goods to B within three days when it is required by B. A is not bound to deliver the goods to B until delivery is not demanded by B.
But when delivery is demanded by B, A is bound to deliver it within three days from this demand.
When Place is not Fixed
When the contract is to be performed without application by the Promisee, and no place is fixed for the performance of it.
It is the duty the promisor to apply to the promisee to appoint a reasonable place for I the performance of the promise and to perform it at such place.
A reasonable place is a question of fact depends on each particular case. (Section 49)
See Also: What is Wagering Contract
Illustration
A undertakes to deliver a thousand maunds of wheat to B on a fixed day. For the performance of the promise.
A must apply to B for the appointment of a reasonable place for the purpose of receiving it and A must deliver it to B at such place.
When Place is Fixed
When under a contract, the place for performance of the contract is specified, the promisor is bound to perform the contract at such fixed place.
If the promisor fails to perform the contract at the fixed place, it is said that contract has not been performed by the promisor.
Illustration:
A promise to deliver 1000 units of his product to B at B’s shop on a certain day. A delivers these 1000 units at B’s railway station. It is not the performance of the contract.
Manner of Performance
The performance of any promise may be made in any manner, or at any time which the promisee prescribes or sanctions. (Section 50)
Illustration:
A owes $2000 to B. B accepts goods from A against this debt. The delivery of the goods operates as payment of the debt.
Illustration:
A purchase the Insurance policy and Insurance Company demands insurance premium by money order. Now it will be deemed as proper manner of performing the contract.
See Also: What is Contract of Sale
Reciprocal Promises
When a contract consists of reciprocal promises to be simultaneously performed, no promisor needs to perform his promise unless the promisee is ready and willing to perform his reciprocal promise (section 51)
Illustration
A and B enter into a contract that A will deliver goods to B and B will make payment on delivery. Now A is not bound to deliver the goods to B unless B is ready and willing to pay the amount.
Similarly, B IS not bound to make payment of goods until A is ready and willing to deliver the goods
Order of performance of Reciprocal Promises
Where the order in which the reciprocal promises are to be performed in expressly fixed by the contract.
They shall be performed in that order; and where the order is not expressly fixed by the contract, they shall be performed in that order which the nature of the transaction requires (section 52)
Illustration
A promise to provide wood to B and B promises to make furniture for A. B is not bound to perform his contract until A performs his contract.
When Time is the essence of the Contract
When the time for the performance is the essence of the contract and the contract is required to be performed at or before specified time and promisor fails to do so within the specified time, the contract becomes voidable at the option of the promisee. (Section 55)
Illustration
A promise to deliver 10000 units of his product to B to be sold at Eid occasion. A delivers the goods three days after the Eid day.
Now the time is the essence of the contract and contract will become voidable at the option of B.
