OBLIGATIONS OF PARTIES TO CONTRACT [ PERFORMANCE OF CONTRACT ]

Written By :- Chandrika Singh (Amity Law School)

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.

Promises bind the representatives of the promisor in case of death of such promisor before performance, unless a contrary intention appears from the contract.

Example 1: A promises to deliver goods to B on a certain day on payment of ` 1, 00,000. A dies before that day. A’s representatives are bound to deliver the goods to B, and B is bound to pay ` 1, 00,000 to A’s representatives. 

Example 2: A promises to paint a picture for B by a certain day, at a certain price. A dies before the day. The contract cannot be enforced either by A’s representatives or by B because it involves use of personal skill. It is a contract of personal nature.

Analysis of Section 37

A contract being an agreement enforceable by law, creates a legal obligation, which subsists until discharged.  Performance of the promise or promises remaining to be performed is the principal and most usual mode of discharge. 

The basic rule is that the promisor must perform exactly what he has promised to perform. The obligation to perform is absolute. Thus, it may be noted that it is necessary for a party who wants to enforce the promise made to him, to perform his promise for himself or offer to perform his promise. Only after that he can ask the other party to carry out his promise. This is the principle which is enshrined in Section 37.Thus, it is the primary duty of each party to a contract to either perform or offer to perform his promise. He is absolved from such a responsibility only when under a provision of law or an act of the other party to the contract, the performance can be dispensed with or excused. 

Thus, from above it can be drawn that performance may be actual or offer to perform.

  • Actual Performance: Where a party to a contract has done what he had undertaken to do or either of the parties have fulfilled their obligations under the contract within the time and in the manner prescribed. 

Example: X borrows ` 5, 00,000 from Y with a promise to be paid after 1 month. X repays the amount on the due date. This is actual performance.

  • Offer to perform or attempted performance or tender of performance: It may happen sometimes, when the performance becomes due, the promisor offers to perform his obligation but the promisee refuses to accept the performance.

Example: P promises to deliver certain goods to R. P takes the goods to the appointed place during business hours but R refuses to take the delivery of goods. This is an attempted performance as P the promisor has done what he was required to do under the contract.