Performance of Contract means the fulfillment of legal obligations created under the contract by both the promisor and the promise. When a Contract is duly performed by both the parties to the contract, the contract comes to an end. The various rules regarding the performance of contracts are as under:
PERFORMANCE OF A SINGLE PROMISE
Performance of a Single Promise:
Who can demand performance?
It is only the promise who can demand performance of the contract. There is a rule that a person cannot acquire right under a contract to which he is not a party. A third party cannot demand performance of the contract even though it was made for his benefit. In case of death of the promise, his legal representatives can demand performance.
Example:
1. A promises B to pay C a sum of Rs.1000. The person who can demand performance is B and not C. In case of death of the promise, his legal representatives can demand performance.
2. A draws a cheque for Rs.100 in favour of C the banker makes a mistake regarding A’s balance and refuses payment. Bank is liable to A ad not to C because C is not a party to contract.
Who may perform?
1. The Promisor Himself:
As a general rule, a contract may be performed by the promisor, either personally or through any other competent person.
But in case of contract involving personal skill, taste or diligence e.g. a contract to paint a picture a contract of agency or of service; the promisor himself must perform the contract of agency or of service; the promisor himself must perform the contact. In case of death or disablement of a promisor, a contract will be discharged and the other party would be freed form liability.
Example:
A promise to paint a picture for B. A must perform the promise himself.
2. The Promisor or His Agent:
Where personal skill is not necessary and the work could be done by any one, the promisor or his representative may employ a competent person to perform it. In case of a contract to sell goods, the promisor himself or his agent may perform the contract.
Example:
A promise B to sell goods. A may perform this promise himself or ask his agent for performance.
3. The Legal Representative:
In case of death of the promisor before performance, the liability of performance falls on his legal representatives of a deceased promisor are not bound to perform the contract. But in case of a contract of impersonal nature the legal representative are bound to perform the contract. They are not personally liable.
Example:
A) Promises to paint a picture for B on a certain day at a certain price. A dies before the day. The contract cannot be preformed. A’s heirs are not liable for the contract as in this case the personal skill of A was involved.
B) Promises to deliver goods to B on a certain day on payment of Rs.1000. A dies before that day. A’s representatives are bound to deliver the goods to B and B is bound to pay the settled sum of Rs.1000 to A’s representatives.
4. The Third Person:
If a promise accepts performance of the promise from a third person, he cannot afterwards enforce it against the promisor. Once the third party performs the contract, and that is accepted by the promise there is end of the matter and the promisor is then discharged.
Example:
A promise accepted lesser amount from a third party in full satisfaction of his claim; it was held that he could not enforce the promise against the promise against the promisor for the remainder.
Performance of Joint Promises:
Joint promises may take any of the following shapes:
1. Where several joint promisor make a promise with a single promise, e.g. A, B C jointly promise to pay Rs.3,000 to D, or
2. Where a single promisor makes a promise with several joint promises e.g. P promise to pay Rs.3000 to Q and R jointly, or
3. Where several joint promisor make a promise with several joint promises, e.g. A, B and C jointly promise to pay Rs.3000 to P, Q and R jointly. The following are the rules regarding performance in this case.
Who can demand Performance?
When a promise is made with several persons jointly, then, in the absence of any agreement to the contrary all the promise jointly have a right to claim compensation and a single promise cannot demand performance.
In case of death of any one promise, the legal representatives of deceased persons jointly can demand performance with serving promises.
When all the promise are dead, the legal representatives of all jointly can demand performance.
Example:
A borrows Rs.5000 from B and C. A promises B and C jointly t return the sum with interest B dies. B’s representative with C jointly can demand performance. On the death of C the representative of B and C jointly can demand performance.
Who may perform?
1. All Primisors must Jointly Fulfill the Promise:
When two or more persons make a joint promise the, unless a contrary intention appears from the contract, all such persons must jointly fulfill the promise. When any one of he joint promisor dies his legal representative must fulfill the promise, jointly with the surviving promisors. On the death of all the original promisors the legal representatives of all of them jointly must fulfill the promise.
The above rule is of course subject to the following usual conditions:
A) The contracts involving personal skill e.g. to paint a picture; come to an end on the death of any of the joint promisor and the liability of performance does not fall on the legal representatives.
B) The legal representatives are not personally liable. Their liability is limited to the assets inherited by them.
Example:
A, B and C jointly promise to pay D Rs.3,000. D may compel either A or B or C or all or any two of them to pay him Rs.3000.
2. Each Promisor may Compel for Contribution:
If one of the joint, Promisors is compelled to perform the whole contract, he can ask for equal contribution to the others, unless a contrary intention appears from the contract.
Example:
If A is compelled to pay the entire amount of Rs.3000 he can recover from B and C Rs.1000 each.
(3) SHARING OF LOSS BY DEFAULT IN CONTRIBUTION
3. Sharing of Loss by Default in Contibution:
If any one of the joint promisors makes a default in making contribution, if any, the remaining joint promisors must bear the loss arising out of such default in equal shares.
Example:
If A is compelled to pay the whole Rs.3000 and C is unable to pay anything. A is entitled to receive Rs.1500 from B. If C’s estate is able to pay one half of his share, A is entitled to receive Rs.500 from C’s estate and Rs.1250 form B.
4. Effect of Release of One Joint Promisor:
In case of a joint promise, if one of the joint promisors is released form his liability by the promise, his liability to the promise ceases but his liability to the other promisors to contribute does not cease.
Example:
A, B and C are under a joint promise to pay Rs.3000 to X. X may release C from liability, but A & B remain liable to pay to X. C is not released from the debt.