Performance of Contract

Performance of Contract

Regarding the performance of contract Section 37 of the Act states that the parties to a contract must either

(i) perform their respective promises or

(ii) offer to perform the same;

(iii) such performance is dispensed with or

(iv) excused under the provisions of the Act or of any other law.

Time and Place of Performance

Sections 46-49 provide for some rules regarding the time and place of performance of a contractual obligation. They may be summarized as follows:

  • Where no time for performance is specified and the promisor is to perform his promise without application by the promisee the performance must be done within a reasonable time.
  • Where a promise is to be performed on a certain day and the performance is to be done without application by the promisee, the promisor may perform it at any time during the usual hours of business on such day and at the place at which the promise ought to be performed.
  • If the date of performance is fixed but the promisee is bound to  apply for performance he must apply for performance at a proper place and within the usual hours of business.
  • Where no place of performance is fixed and the promisor is bound to perform without application by the promisee, the promisor is bound to apply to the promisee to fix a reasonable place for performance and to perform it at that place.

Appropriation of Payment

The underlying principle of Section 59 is that where there are several debts owing to one person, any payment made by the debtor either with an express intimation or under circumstances from which intimation may be implied, must be applied to the discharge of the debt in the manner intimated or which can be implied from the circumstances.

As per Section 59 the payment is to be appropriated according to the following rules:

  • Appropriation as desired by the Debtor.
  • Appropriation by the Creditor.
  • Appropriation towards debts in order of time.

Remission of Performance

Section 63 of the Act allows a party to a contract to dispense with the performance of the contract by the other party, or to extend the time for performance or to accept any other satisfaction instead of performance.

Section 63 reads as under:

Every promise may dispense with or remit, wholly or in part, the performance of the promise made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit.

The effect of the is that the party who has the right to demand the performance of a contract may—

  • Remit or dispense with it, wholly or part; or
  • Extend the time for performance; or
  • Accept any other satisfaction instead of performance.
Performance of Contract

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