EFFECT OF REFUSAL OF A PARTY TO PERFORM THE CONTRACT WHOLLY

Contract

A contract is a legally binding agreement between two or more parties that establishes, defines, and governs their mutual rights and obligations.

A contract is defined as an agreement that meets the following criteria:

  • Consent should be provided freely.
  • The parties must be legally capable of entering into a contract.
  • The significance of adhering to the law should not be underestimated.
  • The presence of legal objects is required.

A contract usually involves the supply of goods, services, or money, or the promise to deliver them in the future.

Performance Of Contract

The legal definition of “Performance” is the fulfilment of a party’s duties to the other party as a result of their contract. A contract establishes a legal responsibility on the contracting parties to carry out their mutual obligations until the contract is dissolved. The most natural and common way to cancel a contract is to carry it out. A person who meets the terms of a contract is released from further obligations. In most cases, such a performance entitled him to the opposing party’s performance as well. When the contract’s performance meets the contractual duties, the contract is considered dissolved.

The term “Performance of Contract” refers to both the promisor and the promisee fulfilling their contractual obligations. Promises bind the promisor’s representatives in the event of the latter’s death before the performance, unless the contract states otherwise, according to Section 27 of the Indian Contract Act. This means that each contracting party must keep its promise or offer to keep it.

Section 39 of the Indian Contract Act, 1872– Effect of refusal of a party to perform the contract wholly

Effect of refusal of party to perform promise wholly. —When a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance. Illustrations:

(a) A, a singer, enters into a contract with B, the manager of a theatre, to sing at his theatre two nights in every week during next two months, and B engages to pay her 100 rupees for each night’s performance. On the sixth night A wilfully absents herself from the theatre. B is at liberty to put an end to the contract.

(b) A, a singer, enters into a contract with B, the manager of a theatre, to sing at his theatre two nights in every week during next two months, and B engages to pay her at the rate of 100 rupees for each night. On the sixth night A wilfully absents herself. With the assent of B, A sings on the seventh night. B has signified his acquiescence in the continuance of the contract, and cannot now put an end to it, but is entitled to compensation for the damage sustained by him through A’s failure to sing on the sixth night.

Explanation of Section 39 of the Indian Contract Act,1872

The effect of a party’s unwillingness to perform their portion of the pledge in its entirety is dealt with in Section 39. This denial could be expressed or based on the party’s intentional disablement, which places the party in a position where they are unable to perform the contract. If a party becomes disabled due to no fault of their own, the contract may be deemed frustrated, and any additional benefits gained by either party may be refunded. Furthermore, the performance is only considered complete when it is executed in its entirety. This means that if the full act or omission is performed following the agreement, the party’s performance is declared complete; otherwise, the promisee may terminate the contract, making it voidable at the promisee’s discretion. This is true only if the promisee has not shown his acceptance of such continuation by words or deeds. This means that the contract is void unless the promisee has given their consent to the contract’s continuation. This assent could be shown by words, gestures, or a lack of resistance, and would be decided on a case-by-case basis utilising reasonable personal standards. The contract stands once this assent is judged to exist, and the promisee cannot revoke it in the future. They cannot refuse to perform while claiming earlier non-performance because they agreed to the contract’s continuation.

As a result, if a party refuses or is unable to perform the contract in its entirety, the contract becomes voidable at the option of the promisee, unless the promisee expresses his assent to the contract’s continuation through words, gestures, or other means, in which case the contract remains valid and the promisee cannot claim otherwise in the future. What must be said, however, is that the promisee is entitled to reimbursement for the damages he has experienced as a result of the breach.

Explanations of Illustrations (a and b) mentioned in Section 39 of the Indian Contract Act,1872

Explanation of Illustration ‘a’

In this example, one party (A) has a contract with another party (B) that requires him to play two nights a week at B’s theatre for the next two months, for which B will pay A 100 rupees per performance. This is A’s sole responsibility, which he fails to fulfil when he is intentionally absent on the sixth night. As a result, at this point, B has the option of terminating the contract and absolving himself of any further obligations to pay A. Section 39 is enforced by the illustration, which states that A is intentionally absent. There is also no claim that B has acknowledged the non-performance, which would have kept the contract in force. As a result, the contract would be voidable at B’s discretion for a reasonable period until it could be determined that he has stated his acceptance of continuation.

Explanation of Illustration ‘b’

Except for one crucial piece of information, the facts in this illustration are identical to those in the previous one. After breaking the contract by being intentionally absent on the sixth night, A performs on the seventh night with B’s permission. By allowing A to sing on the seventh night, B has indicated his willingness to extend the contract, which means it is no longer voidable at B’s discretion. As a result, any non-performance on B’s part now will be considered a violation of the contract. B’s consent is demonstrated by his gesture of allowing A to sing on the seventh night. However, it is crucial to note that the continuation of this contract does not absolve A of its duty to B for damages resulting from the failure to perform on the sixth night. B is still entitled to compensation for any losses he sustained as a result of A’s failure to sing on the sixth night, and thus A is liable to B for any losses incurred as a result of his failure to perform on that night.

Conclusion

Section 39 gives a party the option of voidability if the other party fails to perform their performance in its entirety, while also stating that if such non-performance is accepted by the promisee and they signify their consent to continue with the contract, they cannot claim the contract is void at any later stage where they must perform and thus are not exempt from their performance. The promisee, on the other hand, is entitled to the damages incurred as a result of the promisor’s failure to fulfil in that specific instance. Regardless, the contract remains valid and enforceable as long as the promisee has indicated his or her acceptance, whether verbal or written.

References

  1. https://advocatespedia.com/Section_39_of_The_Indian_Contract_Act_1872
  2. https://indiankanoon.org/doc/409770/

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