PERFOMANCE OF CONTRACT. PERFOMANCE OF CONTRACT Final stage A contract is entered into for being performed. The parties must perform their respective obligations

PERFOMANCE OF CONTRACT


Final stage

A contract is entered into for being performed. The parties

must perform their respective obligations under the contract.

Where a promisor dies before performance of a contract ,

his legal representative is bound to perform the contract

unless a contrary intention appears from the words in the

contract or the nature of the contract.


Examples

Ram contracts to deliver certain goods to Mohan on a certain day on payment of Rs.1200. Ram dies before that day. Ram’s legal representatives are bound to deliver the goods to Mohan and Mohan is bound to pay to Ram’s legal representatives

John promised to produce an Ad. Film for David’s product, by a certain day for a certain price and John dies before that day, the contract can not be enforced by either party


PERFOMANCE

-- Who can demand performance - party to the contract

- legal representative

-- Who must perform the contract - party to the contract

- legal representative

-- Performance of reciprocal promises


Contract which need not be performed

1. Agreement to do impossible acts are void and need not be erformed.

2. When a contract is substituted by a new contract, or is altered, the

original contract need not be performed Discharge by mutual

Agreement

3. Contract discharged by operation of law need not be performed

4. Contracts which have lapsed by time Barred by limitation

Discharge of Contract

Contract may be discharged

1) By performance - actual or attempted

2) By subsequent or supervening impossibility or illegality

3) By mutual consent or Agreement

4) By lapse of time

5) By Operation of law

6) By Breach of contract or non-performance


1. Performance

a) Actual performance

b) Attempted performance or tender


2. Impossibility of performance

a) Initial impossibility -- void- ab- initio

b) Subsequent impossibility

i) when an act becomes unlawful contract becomes void

ii) if one party knew or had reasonable diligence to know

that the performance of the contract will be impossible

or unlawful, such promisor must compensate for any loss

suffered by the promisee


Impossibility of performance may occur in the following cases :-

A. I) When at the time of contract, the subject matter is

non-existent but the parties assume the same to be

existent, the contract is void

II) when the subject matter of a contract,subsequent

to its formation, is destroyed,without the fault of

the promisor or promisee

EXP - NEXT SLIDE


EXAMPLES

a) Music hall let out for concert for few specified days -- before the start of concert on specified day, fire broke out . CONTRACT BECOMES VOID

b) Agreement to sell standing crop but crop subsequently destroyed by pest .- CONTRACT BECOMES VOID

c) Factory where machine was to be installed gets destroyed by fire CONTRACT BECOMES VOID

d) Ship in which goods were coming was seized by a foreign

country CONTRACT BECOMES VOID



B. A contract becomes impossible,

when the subject-matter subsequently disappears

or

When the subject matter continues to exist

but the object the parties had in mind fails to materialize

CASE. --Next slide



CASE:- Krell vs Henry

H hired a room in London from K with the object, as both parties knew , of using the room to view the intended coronation procession of King Edward VII on a particular date. By reason of the King’s illness the procession was postponed . H consequently could not use the room although he could go there and sit in the room but with no purpose as there was no procession . K filed a suit for recovery of rent . It was held that H need not pay the rent as the contract was discharged on the failure of the ultimate purpose or on postponement of the procession which was foundation of the contract


C. A contract becomes impossible, when the change of circumstances has affected the performance of contract to such an extent as to make it virtually impossible or extremely difficult or hazardous.

Example-- the plot on which erection contract is to be

executed is compulsorily acquired by he Govt.


D. Where the nature and terms of contract require personal performance by the party, his death or serious illness or incapacity will render the contract impossible

Example :- Roshan and Roshni agree to marry .Before the date of marriage

one of them becomes mad .

Hussain undertook to paint a picture for a certain price but before

he could do so Hussian met an accident and lost his eyes .


E. Change of law

- Sale of liquor prohibited

- Ban on sale of wheat in open market


F. Outbreak of war

I) war between the countries of both the

contracting parties

ii) war between the country of one the

contracting parties and a third country --

difficulty of performance


Cases not covered by Supervening Impossibility

I. Difficulty of performance ( Transport strike , non-availability of goods)

II. Commercial Impossibility ( Incurring losses, increase in wages )

III. Impossibility due to the default of a third person

IV. Strike and lock- out

V. Failure of one of the objects


3. Mutual consent or Agreement

Novation

Alteration

Rescission / cancellation /Annulment of contract

Remission (Accepting lesser amount in full settlement)

Waiver ( Abandonment or giving up of a right -may be written or

unwritten)

Discharge of Contract4. LAPSE OF TIME

THE LIMITATION PERIOD ( The Limitation Act )

TIME IS OF ESSENCE IN A CONTRACT ( if the contract is not performed at the fixed time, contract

comes to an end and non-defaulting party need not perform its contractual obligation )


5. Operation of law

Death - where Contract is of personal nature - contract discharged

- where Contract is not of personal nature - contract not discharged

Insolvency - On Insolvency Court passing an “order of discharge“ exonerating the

insolvent from liabilities on debts incurred prior to his adjudication

--cont.


5. Operation of law

Material alteration made in written documents without the consent of the other party

- change in amount of money, forged signature

Merger of an inferior contract into a superior Contract - tenant to purchase the tenanted property

- In a bill of exchange, acceptor becomes holder of the B /E


6. Breach of contract,

a) Anticipatory breach i. Expressly by words spoken or written

ii. Impliedly by conduct of one of the parties

consequences a. aggrieved party may treat contract as cancelled and sue

b. aggrieved party may not treat contract as cancelled and wait till the

time to performance and then treat it as cancelled and sue

b) Actual breach

Breach of ContractConsequences Of breach

1.Cancellation of contract

2.Damages - Ordinary damages

- Special damages

- Exemplary damages

3.Specific performance

4.Suit for Injunction

5.Suit for Quantum merit

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PERFOMANCE OF CONTRACT. PERFOMANCE OF CONTRACT Final stage A contract is entered into for being performed. The parties must perform their respective obligations