A contract is a legally binding agreement that establishes, defines, and governs the members’ mutual rights and obligations.
An agreement becomes a contract if it meets the following criteria:
- Consent should be given freely.
- The parties must be able to lawfully engage in a contract.
- Following the law should be taken into consideration.
- The presence of legal objects is required.
A contract usually involves the transfer of goods, services, or money, or the promise to do so in the future.
Performance Of Contract
The legal definition of “Performance” is the fulfilment or accomplishment of a party’s duties to the other party as a result of the contract they have gone into. A contract imposes a legal responsibility on the contracting parties to fulfil their mutual obligations, and it lasts until the contract is discharged. Performing the contract is the most natural and common method of terminating a contract. A person who completes a contract according to its terms is released from further responsibilities. In most cases, such a performance entitled him to the other party’s performance as well. When the contract’s performance meets the contractual duties, the contract is regarded to be terminated.
The term “Performance of Contract” refers to both the promisor and the promisee fulfilling their respective contractual obligations. Promises bind the representatives of the promisor in the event of the latter’s death before the performance, according to Section 27 of the Indian Contract Act, unless the contract expressly states otherwise. This implies that each party to the contract is expected to fulfil or offer to fulfil its promise.
Section 37 of the Indian Contract Act,1872 & Types of Performance of Contract
Performance is discussed in Section 37 of the Contract Act. Section 37 of the Indian Contract Act is:
Obligation of parties to contract. —The parties to a contract must either perform, or offer to perform, their respective promises, unless such performance is dispensed with or excused under the provisions of this Act, or of any other law. Promises bind the representatives of the promisors in case of the death of such promisors before performance, unless a contrary intention appears from the contract. Illustrations:
(a) A promises to deliver goods to B on a certain day on payment of Rs.1,000. A dies before that day. A’s representatives are bound to deliver the goods to B, and B is bound to pay the Rs. 1,000 to A’s representatives.
(b) A promises to paint a picture for B by a certain day, at a certain price. A dies before the day. The contract cannot be enforced either by A’s representatives or by B.
Hence, there are two sorts of performance, according to the Section:
- Actual performance: Actual execution of the contract indicates that a person has fulfilled the liability or duty that he or she has agreed to fulfil, and there is no more work that he or she is obligated to fulfil under the promise. He is believed to have kept his word and fulfilled the commitment.
- Attempted performance: When the performance is about to be due. The promisor is unable to fulfil his obligation or perform his duty because he is stopped from doing so by the promisee. The attempted performance of a promise refers to a situation in which the promisor meant to fulfil his commitment or discharge his duty but was prevented from doing so due to an intervening disability.
Levels of Performance of Contract
There are three levels of Performance:
- Complete Performance of a Contract: When a party performs a contract completely, it signifies that the contracting party has completed all of the contract’s requirements. A fully performing party is entitled to a fully performing party from the other.
- Substantial Performance of a Contract: Substantial performance of a contract means that it is less than complete, yet it is adequate to prevent a breach of contract claim. In more detail, it signifies that a party has completed all material portions of the contract but has left non-material aspects unfinished.
- Breach of a Contract: A material breach is any performance that is not complete or substantial. This entails a level of performance that is below what is considered acceptable. The materially breaking party is accountable for damages to the other party and cannot sue the other party for performance.
Who can demand the performance of a contract?
- Promisee: A promisee is a person who has been promised something. In principle, a promisee can enforce a promise made to him, but when the consideration shifts from the promisee to someone else, the latter, not the promisee, has a cause of action because he is the person for whose benefit the contract was signed. Only the ‘Promisee,’ not a third party, can demand the contract’s performance, even if the contract is for their benefit.
- Legal Representative: Individuals and heirs who hold assets but do not own them, such as an executor or administrator of an estate or a court-appointed guardian of a minor or incompetent person, are referred to as legal representatives. A legal representative is someone who takes someone else’s position and represents their interests. A person in charge of someone else’s legal matters. The legal representatives’ expression covers all of these people. Unless there is a contrary intention, the legal representative of the promisee may demand fulfilment of the contract in the case of the promisee’s death.
- Third-Party: A third party is a person who has the legal right to sue under a contract while not being a party to the contract or a signer of the contract. There are two types of third-party beneficiaries: those who are “deliberate or intended” and those who are “accidental.” Only in extraordinary circumstances, such as a beneficiary in a trust, can a third-party demand contract performance even if he is not a party to the contract.
Each party to a legally enforceable contract has the right to expect the other party to perform the deal as agreed. That is what legally enforceable agreements are for. Contract performance is governed by legal principles, regardless of the contract’s content or nature. Because the law has a policy that business law should be predictable and strengthen the certainty of the law’s implementation, it is that manner.
To summarise the article, it is to state that ‘Performance of contract’ is believed to be the finest manner of discharging any contract out of all the options (Performance/Mutual Agreement or Consent/Lapse of Time/Supervening Impossibility/Operation of Law/ Breach of Contract). The PROMISEE has the right to require contract performance. If the promisee is deceased, the LEGAL REPRESENTATIVE might claim the same. And, in extremely limited instances, such as in the case of a trust, a THIRD-PARTY can demand contract fulfilment even if he is not a party to the contract.
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