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Chapter: 11th Commerce : Performance of Contract

Performance of Contract

There are mainly two ways of performing a contract such as: i. Actual Performance ii. Attempted Performance



Regarding the performance of contract, Section 37 of the Act states that the parties to a contract must be 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. There are mainly two ways of performing a contract such as:

i. Actual Performance

When the party has done what he had undertaken to do, it is called actual performance. In actual performance, the party is to fulfil all his obligations under the contract.

ii. Attempted Performance

When the party offers to perform his obligation, it is not accepted by the promisee.

So, it is also called offer to performance or tender. Hence, a valid tender of performance is considered to be the performance of a promise.


Essentials of a Valid Tender of Performance (Section 38)

A tender, tobe valid, must satisfy the following essential requirements

i.               It must be unconditional

ii.               It must be for the whole  obligation and must not be in instalments, if the contract requires in full.

iii.               It must be by a person who is in a position and willing to perform the promise.

iv.               It must be at the proper time and place.

v.               It must be in proper form.

vi.               It must be made to a proper person i.e. to the promisee or his authorized agent.

vii.               In case of the tender of goods the promisee must be given a reasonable opportunity to inspect the goods.

viii.               It may be made to one of the several joint promisees.


Who can Demand Performance?

Thef following are those who can demand the performance of a valid contract

1. Promisee – only a promisee can demand performance and not a stranger demand performance of the contract.

2. Legal Representative – legal representative can demand Exception performance. Contrary intention appears from the contract. Contract is of a personal nature.

3. Third party – Exception to “stranger to a contract”


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