Introduction
A contract is a lawfully binding agreement that creates binding obligations between two or more parties.”
After contract is made, the next function is its “Performance“.
Performance of contract means fulfilled the terms and conditions agreed upon in the contract. It is the stage where promises become actions. Both parties involved in the contract have certain “rights and obligations“, which they must follow to keep the contract valid and complete.
It is governed by Sections 37 to 67 of the Indian Contract Act, 1872. Both parties are expected to complete their part honestly. If one fails, legal remedies may be available.
What is Performance of Contract?
Performance means doing what was promised in the contract. It can be:
- Actual Performance: When both parties fulfill their promises.
- Attempted Performance (Tender): When one party offers to perform, but the other refuses.
Example: A agrees to deliver a mobile to B for ₹10,000. A delivers the mobile, and B pays. This is actual performance.
Contracts which ‘must’ be performed:
[Section 37-39]
Obligation of Parties to perform[Section -37]
- Each party must do what they agreed in the contract, either perform or offer to perform their respective promises.
- In case of death of promisors , the representatives of the promisors are bind to perform.
Example: Arun promises to deliver goods to ‘Banti’ on a certain day on payment of rs. 1000. Arun dies on that day.
Arun’s representatives are bound to deliver the goods to Banti.
Banti is bound to pay the rs. 1000 to Arun’s representatives.
Section -38 ( Promisee’s refusal)
Effect of refusal to accept offer of performance:
Where a promisor has made an offer performance to the promisee.
the offer was not accepted by the promisee, the promisor is not liable for non-performance and does not forfeit (lose)any of his rights under the contract.
Section -39
Result of one party’s absolute refusal to perform their contractual obligation:
The Promisee is entitled to cancel or bring the contract to an end.
{Also known as anticipatory breach of contract}
Meaning – when the promisor absolutely refuses to perform the contract even before the due date of performance, it is known as anticipatory breach of contract.
Illustration:
Shreya singer, enters into a contract with Banta, the manager of theatre, to sing at his theatre two nights in every week during the next 2 month. Banta promises to pay her 100 rupees for each night per performance.
On the sixth night, Shreya deliberately absents herself from the theatre.
Banta is at liberty to put an end to the contract.
In above illustration,
If with the assent of Banta, Shreya songs on the seventh night.
Banta has signified his continuence of the contract the contract and cannot put an end of it.
Banta is entitled to compensation for the damages sustained by him through Shreya’s failure to sing on the sixth night.
Case law related to anticipatory breach of contract
Frost v/s knight (1872)
- In this case the defendant promised to marry the plaintiff(victim) on the death of his father.
- While the father was still alive, he married another woman.
- It was held that it had become impossible that he should marry the plaintiff.
- She (plaintiff) was entitled to sue him (defendant) for the breach of contract. Court declared plaintiff entitled to compensation.
- Judge wrote in his decision that it would be unfair to ask the defendant to wait for the execution of the contract until the event occurs.
By Whom contract Must Perform? (Sec. 40-45)
Section 40– By whom promise is to be performed:
By the promisor, his agent, or legal representative if the promisor dies.
Example: A promises to paint B’s portrait. Only A can do it unless B agrees to someone else painting it.
Section 41 – consequences of accepting performance from Third-party :
If a third person agrees to perform the promise on behalf of the promisor.
Section 42– Devolution of Joint liabilities:
Devolution means transfer,
When two or more persons jointly promise to perform to perform a contract they are known as joint promisors.
In joint promise the devolution of joint liabilities will be in following orders:-
All joint promisors fulfill their promise and Upon the death of any one of the joint promisors, his legal representative, along with the surviving promisors, is responsible for fulfilling the promise.
After the death of the final surviving promisor, the obligation to fulfill the promise passes to the representatives of all the promisors.
Example: If Anay, Ridit, and Chirag jointly promise to pay ₹9,000, all are equally responsible.
Section 43 – Promisee can compelled any one of joint promisors to perform:
In joint promise, the promisee has right to force any one of them to fulfill the promise.
Illustration: Akash, Bihari, and Chintu jointly promise ₹3,000 to Dev. Dev can demand the full amount from any one of them.
Section 44– Release of one joint promisor:
If the promisee releases any one of joint promisors from liability, the other joint promisors still bound, and their responsibility under contract remains unchanged.
If Dev releases Chintu, Akash and Bihari still remain liable.
Section 45 – Devolution of Joint rights:
When a person makes a promise in favour of two or more persons joinly, the devolution of joint Rights will take place in the following orders:-
During the joint life of all the promisees, the right to claim performance rests with them.
After the death of any one of joint promisee, and death of all promisees the right to claim performance rests with the representative of such deceased person jointly, (in death of one with survivor).
If a promise is made to Aryan, Dhyan, and Abhi, all can demand performance jointly.
Time and Place of Performance (Sec. 46–50)
Section 46–If no time fixed:
Performance must be done within a reasonable time.
Section 47–48– If time is fixed:
- Promisor must perform during business hours at proper place.
- If Promisee has to request performance, he must do so reasonably.
Section 49–No place fixed:
Then promisor should ask promisee to fix a place.
Section 50–Performance in manner/time prescribed by promisee:
Promisee can guide how and when performance is done.
Case law: CIT v. Ivale Glass Works– If a contract allows flexibility in time/manner of performance, then that must be respected.
Performance of Reciprocal Promises (Sec. 51–58)
Reciprocal promises are mutual, where one promise is the consideration for another. section-2(f)
Section 51– One need not perform unless the other is ready to perform.
Section 52– Order of performance:
If order is fixed, follow that; if not, follow the nature of transaction.
Illustration:A agrees to build B’s house, and B agrees to pay after completion. A must perform first.
Section 53 – One party prevents the other from performing:
Contract becomes voidable, and the affected party can claim compensation.
Section 54– When one party fails to perform the first promise:
They can’t ask for the other’s performance and must compensate.
Section 55– Time is of essence:
- If time is essential and not followed → contract is voidable.
- If time is not essential → only damages can be claimed.
Illustration: A promises to deliver goods before Diwali. If not delivered, B can cancel the contract if Diwali delivery was critical.
Impossibility of Performance (Sec. 56)
Section 56 – Impossible contracts are void.
If performance becomes impossible due to unforeseen events, the contract is discharged. This is called doctrine of frustration.
Illustration: Kamla agrees to dance but becomes seriously ill. The contract becomes void.
Case Law:
Satyabrata Ghose v. Mugneeram Bangur & Co.
- Temporary requisition of land does not frustrate a contract. Under Sec. 56, frustration arises only when performance becomes impossible or the contract’s foundation is destroyed, not by mere delay.
This case is a leading authority on the doctrine of frustration in India. It clarified that:
- Commercial hardship or delay is not enough.
- The contract must become impossible or radically different from what was agreed.
Krell v. Henry
- Subject matter was destroyed (King’s parade), contract was frustrated.
- A contract is not frustrated by commercial impossibility or by commercial hardship.
Legal and Illegal Promises (Sec. 57–58)
Section 57 – Legal + illegal acts:
Legal parts are enforceable; illegal ones are void.
Section 58– Alternative promises:
If one option is legal and the other illegal, only the legal one can be enforced.
Illustration: A promises to deliver rice or smuggled opium. Only rice delivery is legal and enforceable.
Appropriation of Payments (Sec. 59–61)
Application of payment
Section 59– Appropriation of debtor :
Creditor agrees to follow that, to apply the payment to discharge of a particular debt request by debtor.
Case: Devaynes v. Noble (Clayton’s Case)– Debtor can tell which debt to pay.
Facts: A partnership banking firm dissolved after one partner died. The question was how to adjust deposits and withdrawals in a customer’s account.
Laid down the FIFO rule — in running accounts, the first deposit is deemed to be used for the first withdrawal. Important for appropriation of payments in banking law.
Section 60– Appropriation of creditor :
Creditor can choose which debt to clear.
Section 61– Appropriation by law :
Payment is adjusted in order of time, or equally if incurred at same time.
When Contracts Need Not Be Performed (Sec. 62–67)
Section 62 – Novation, Rescission, Alteration:
- Novation = New contract replaces the old.
- Rescission = Contract is cancelled.
- Alteration = Change in contract terms.
Case: Scarf v. Jardine (1882)
Held that after partnership dissolution, a creditor must elect to sue either the old firm or the new firm — cannot proceed against both. Established the rule of election in partnership liability.
Section 63 – Promisee may remit or waive performance.
Illustration: A owes B ₹5,000. B accepts ₹2,000 in full settlement. A is no longer liable for the balance.
Section 64– When a voidable contract is rescinded, the other party is not bound to perform.
Also, the rescinding party must return any benefit received.
Section 65 – Person who gets an advantage under a void agreement must return it.
Illustration: A gives B ₹1 lakh to marry A’s daughter, who is already dead. B must return the money.
Section 66 – Rescission must be communicated like a proposal.
Section 67– If promisee preventing promisor from performing his duty, promisor is excused.
Illustration: A agrees to repair B’s house. B doesn’t point out the damaged areas. A is not liable for incomplete work.
Conclusion
Performance of contract is the core of contract law. The Indian Contract Act provides detailed rules to ensure fairness when enforcing agreements. Whether performance is prevented, delayed, or impossible—every situation is addressed with a clear legal remedy.
Also Read:
Rights of undertrial prisoners in India
How To Send A Legal Notice In India
