Performance of Contract means fulfilling the legal obligations respectively created under the contract by both the promisor and the promisee. Once the parties have entered into a contract, the next logical thing is to perform the respective parts of the promises that were agreed upon at the time of entering the contract. A contract is an agreement that is enforceable by law, creates a legal obligation on both parties to the contract, and exists until the contract is discharged. When the parties perform their part of the obligation, the contract gets fulfilled and discharged by performance.
Geeky Takeaways:
- A contract is an agreement that is enforceable by law, creates a legal obligation on both parties to the contract, and exists until the contract is discharged.
- Section 37 states that performance can either be actual or an offer to perform.
- The obligation to promise is absolute.
- In a case where the party who wants to enforce the promise made to him must perform his promise, and only after performing his obligation can he ask the other party to carry out his promise.
The general rule is that the promisor must perform exactly what he agreed to perform at the time of the contract. It is to be noted that the obligation to perform is absolute. Thus, in a case where the party who wants to enforce the promise made to him must perform his promise. Only after performing his obligation can he ask the other party to carry out his promise. This is the principle that is established under Section 37. Hence, it is the duty of both parties to the contract to either perform or offer to perform their promise. The performance can be dispensed with or excused only when he is absolved of such responsibility under a provision of law or an act of the other party to the contract.
Section 37 of the Indian Contract Act, 1872 establishes 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 the contract act or of any other law.”
1. Promisee: As per the general rule, only the promisee can demand the performance of a promise under a contract. Even the third party cannot demand a promise even though the promise is made for his benefit. For example, X promises Y to give ₹1,000 to Z. In this case, only Y can demand performance from X. Here, Z cannot demand performance from X, even though the contract is for his benefit.
2. Legal Representative: In a case where the promisee has died, the legal representative of the promisee can demand performance, unless a conflicting intention appears from the contract or where the contract is personal. For example, K agrees to marry L. However, before the marriage takes place, K dies. Since it is a contract of a personal nature, the legal representative of K cannot demand the performance of the promise from L.
3. Third Party: In some rare cases, the third party can also demand the performance of the contract. Although he is not a party to the original contract, he is a stranger to a contract.
4. Joint Promisees: Where a person has made a promise to two or more persons jointly, then the performance of the promise may be demanded either:
- by all the promisees jointly; or
- in case of the death of any of the joint promisees, the representatives of such deceased person jointly with the surviving promisees, or
- in the event of the death of all joint promisees, representatives of all of them jointly.
So, the rights of joint promisees are only joint, and any of them cannot demand performance unless it was agreed in the contract. For example, X took a loan from Y and Z, and he promised Y and Z jointly to repay them ₹5,000 plus interest on a specified day. Y dies and now the right to claim performance rests with Y’s representative jointly with Z. After Z’s death, it would lie with the representatives of Y and Z jointly.
1. Promisor: In a case where, from the nature of the contract, it prima facie appears that the intention of the parties at the time of entering the contract was that the promise should be performed by the promisor himself, then such a promise must be performed by the promisor himself. The performer is required to perform the contract himself, usually when the performance involves personal skill, taste, or artwork. For example, A promises to cook tiramisu for B. As this promise involves the personal cooking skills of A, it must be performed by A only.
2. Promisor or His Agent: When the contract does not require the involvement of the personal skill of the promisor, the contract could be performed by the promisor or by any other competent person on behalf of the promisor. For example, X promises to pay Y a sum of money. X may perform this promise either by paying the money personally to Y or by causing it to be paid to Y by his authorized agent. In both cases, the performance will be fulfilled.
3. Legal Representative: When the contract does not involve any personal skill or taste, such a contract may be performed by his legal representative after the death of the promisor. Such performance will have the same effect as it is performed by the promisor. For example, X promises to deliver goods to Y on a certain day on payment of ₹5,000. X dies before the said day. X’s legal representatives are liable to deliver the goods to Y, and Y is bound to pay ₹5,000 to X’s representatives. However, in a case where the contract involves some personal skill or taste, the parties will be excused from performance in the event of the death of the promisor.
4. Performance by a Third Person: In some cases, a contract may also be performed by a third person, provided that the promisee accepts such an arrangement. According to Section 41 of the act, once the promisee accepts the performance from a third person, he cannot compel the promisor to perform the contract again, as the performance by the third person will have the same effect as if it were done by the promisor. For example, X took a loan of ₹5,000 from Y. Z pays on behalf of X. Now, as Z has paid Y the loan amount and Y has accepted this arrangement, he further can’t demand the amount from X.
Conclusion
Once the contract has been entered into, the next phase is to perform the contract. The majority of the promises are fulfilled by the performance. The Indian Contract Act specifies the rule, on who can demand the performance and who can perform the contract. Section 37 has established 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 the contract act or any other law in force. It is the duty of both parties to the contract to either perform or offer to perform their promise. The performance can be dispensed with or excused only when he is absolved of such responsibility under a provision of law or an act of the other party to the contract. Performance may be demanded by the promisee himself as a general rule; however, others can also demand the performance case on a base basis.
Frequently Asked Questions (FAQs)
1. What is a Promise?
Answer:
As per Section 2(b) of the Indian Contract Act, the term “Promise” means “when the person to whom the proposal is made signifies his assent thereto, the proposal becomes an accepted proposal. A proposal when accepted, becomes a promise”.
2. What is the Performance of the Contract?
Answer:
The term ‘Performance of Contract’ means that both, the promisor, and the promisee have fulfilled their respective obligations, which the contract placed upon them.
3. When can a legal representative demand Performance?
Answer:
When the promisee has died, the legal representative of the promisee can demand performance, unless a conflicting intention appears from the contract or where the contract is of a personal nature. For example, K agrees to marry L. However, before the marriage takes place, K dies. Since it is a contract of a personal nature, the legal representative of K cannot demand the performance of the promise from L.
4. When can an agent perform a contract?
Answer:
When the contract does not require the involvement of the personal skill of the promisor, the contract could be performed by the promisor or by any other competent person on behalf of the promisor.
5. What arrangements are there in joint promises?
Answer:
Where a person has made a promise to two or more persons jointly, then the performance of the promise may be demanded either
- by all the promisees jointly; or
- in case of the death of any of the joint promisees, the representatives of such deceased person jointly with the surviving promisees, or
- in the event of the death of all joint promisees, representatives of all of them jointly.
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