UNDERSTANDING PERFORMANCE OF CONTRACTS : KEY OBLIGATIONS & LEGAL ESSENTIALS
Performance of a Contract
OBLIGATIONS OF PARTIES TO CONTRACTS (Sec. 37 & 38)
| Actual performance | Promisor makes an offer of performance to the promisee. The offer has been accepted by the promisee |
| Offer to perform Tender Attempted performance | Promisor makes an offer of performance to the promisee The offer has not been accepted by the promisee. |
TYPES OF TENDERS AND THEIR EFFECTS
| Tender or Goods and services | Goods or services need not be offered again if The promisor is- (a) Discharged. (b) Not required to offer again: (c) Not responsible for non-performance. (d) Is entitled to sue the other party |
| Tender of money | The debtor remains liable to pay the debt The debtor is discharged from liability for payment of interest from the date of tender. |
CONDITIONS OR ESSENTIALS FOR A VALID TENDER (Sec. 38)
(a) The tender must be unconditional
(b) The tender must be for the whole obligation
(c) The tender must be given at a proper time
(d) The tender must be given at a proper place
(e) The tender must give a reasonable opportunity of inspection
(f) The party giving the tender must be willing to perform his obligation
(g) The tender must be made to the proper person
(h) The tender must be made for the exact amount of money.
PERSONS LIABLE FOR. & ENTITLED TO PERFORMANCE (Sec. 40 & 42)
| Persons liable for performance | Persons entitled to performance |
| (a) Promisor (b) Agent of promisor (c) Any of the several joint promisors (d) Legal representative of a promisor | (a) Promisee (b) Agent of promisee (c) Joint promises (d) Legal representative of a promisee |
PERFORMANCE OF JOINT PROMISE (Sec. 42)
(a) All the joint promisors are jointly and severally liable. However, the contract between the joint promisors may provide otherwise
(b) A joint promisor may claim contribution from other joint promisors, if he is compelled to perform the whole promise
(c) A joint promisor may claim contribution from other joint promises, if any other joint promisor makes a default in performance of his promise
(d) Where one of the joint promisors is released, other joint promisors shall continue to be liable.
APPROPRIATION OF PAYMENTS (Sec. 59 to 61)
| Application payment where debt to be discharged is indicated | • A debtor owes several distinct debts to the creditor • The debtor makes a payment to the creditor • The debtor intimates the creditor that the payment made is to be applied to the discharge of some particular debt. • The creditor has no option but to apply such payment for the discharge of such particular debt. |
| Application payment where debt to be discharged not indicated | • A debtor owes several distinct debts to the creditor • The debtor makes a payment to the creditor • The debtor does not indicate the debt for which the payment is to be applied • The creditor has the discretion to apply such payment for any lawful debt which is due to him from the debtor |
| Application payment where none of the parties makes the appropriation | • A debtor owes several distinct debts to the creditor • The debtor makes a payment to the creditor. • The debtor does not indicate the debt for which the payment is to be applied • The creditor accepts such payment but does not apply such payment for any lawful debt which is due to him from the debtor. • The payment shall be applied in discharge of the debts in order of time. |
