The term ‘performance’ in its literal definition refers to the execution of a task or action. Legally, “performance” refers to the act of fulfilling or completing the duties that one party has towards the other party as stated in the contract they have gone into.
As an illustration, let’s suppose a scenario where two parties, ‘A’ and ‘B’, engage into a contractual agreement. According to the provisions of the contract, A is obligated to give a book to B upon receiving a payment of five hundred rupees as consideration. In accordance with the contract, B remits a sum of five hundred rupees to A, who thereafter fulfills their obligation by delivering the book.
A concise explanation or description of the meaning of a word, concept, or term.
As per Section 37 of the Indian Contract Act, 1872, the individuals involved in a contract are obligated to fulfill or propose to fulfill their respective commitments, unless such fulfillment is waived or excused by the terms of the act or any other legislation.
Contracts obligate the representatives of the individuals making the promises in the event of the promisors’ death before to fulfilling their obligations, unless the contract explicitly states otherwise.
Therefore, it is the main obligation of each party involved in the contract to either fulfill or present the willingness to fulfill its commitment.
Types of Performance
- Actual performance: An actual promisee refers to the situation where a promisor has offered to do a task to the promisee, and the promisee has accepted the offer. The contractual duties are fulfilled, resulting in the termination of a party’s responsibilities under the contract.
- Attempted performance or tender of performance: An attempted performance refers to the situation when the promisor has offered to fulfill their obligation to the promisee, but the promisee has not accepted the offer [Section 38]. The act of rejecting an offer to fulfill a promise relieves the person from any obligation or responsibility to fulfill that commitment.
Types of tenders
- Tender of goods and services: It refers to the fulfillment of a contract to deliver products and services. This is considered complete when the goods are presented for acceptance, following the conditions specified in the contract. If the products and services offered are not accepted, the offeror is responsible for taking them back and is released from any obligation or liability.
- Tender of payment: When the debtor offers the money owed to the creditor, but the creditor declines to take it. The debtor remains obligated to repay the borrowed funds. Consequently, offering money as payment cannot lead to the elimination of a debt.
Offer of performance/Tender
Section 38 of the Indian Contract Act, 1872 outlines the necessary elements for a legally binding offer of performance.
The offer must be without any conditions.
The offer must be made at an appropriate time and location, allowing the party sufficient opportunity to determine the competence of the person making the offer to engage in a contract.
If the offer made by the person making the offer is to provide certain products to the person receiving the offer, then it is the responsibility of the person making the offer to give the person receiving the offer a fair amount of time to confirm that the goods being offered are the ones that the person making the offer is obligated to provide according to the terms of the contract.
Regulations pertaining to the timing and location of contract execution.
Section 46 of the Indian Contract Act, 1872 deals with the performance of a promise where no application is required and no specific time is mentioned.
If a person who makes a promise is obligated to fulfill that promise without being asked by the person to whom the promise was made, and no specific timeframe is mentioned for the fulfillment, then the promise must be fulfilled within a reasonable amount of time.
Section 47 pertains to the specific time and location for fulfilling a commitment, where the time is clearly stated and no formal request needs to be made.
If a promise is to be fulfilled on a specific day without any request from the person to whom the promise was made, the person making the promise might fulfill it at any moment throughout the regular working hours on that day.
Requesting approval for a scheduled performance on a specific day at the designated time and location. (Section 48): If a promise is supposed to be fulfilled on a specific day, the person making the promise can agree to fulfill it after the person receiving the promise requests it. Under such circumstances, it is the obligation of the party to whom the promise was made to request fulfillment at an appropriate location and time during regular business hours.
Section 49 of the law states that when a promise is supposed to be fulfilled without the promisee having to request it, and no specific location is specified for the fulfillment, it is the responsibility of the person making the promise to ask the promisee to choose a reasonable location for the fulfillment and then fulfill the promise at that chosen location.
Performance, as specified in Section 50, refers to carrying out a promise in the manner and timeframe approved by the person to whom the promise was made. The promise can be fulfilled in any way or at any time that is authorized or agreed upon by the promisee. A contract may also be established if the party making the promise agrees to fulfill the contractual obligations according to the specifications of the party to whom the promise is made, including the manner, location, and time of performance.
Who is responsible for performing contracts?
Provisions pertaining to the execution of the contract are outlined in Section 40 of the Contract Act, 1872. This clause stipulates that if the terms of the contract indicate that the parties intended for a specific promise to be fulfilled only by the promisor and no one else can fulfill it on their behalf.
If the provisions of a contract do not specify otherwise, any competent person can fulfill the promise on behalf of the promisor if they are unable to do so themselves.
Effect of Refusal of party to perform promise
If one party to a contract refuses or becomes unable to fulfill their complete promise, the other party has the right to terminate the deal, unless they have explicitly indicated, by words or actions, their agreement to continue with it.
- Promisee: The promisee is not entitled to seek the fulfillment of the contract from a stranger.
- Legal Representative:If the promisee dies, the legal representative has the right to request fulfillment of the contract, unless the contract explicitly states otherwise or if the contract is of a personal character.
- Third Party: In certain uncommon instances, a third party may have the right to enforce the terms of a contract. This can occur, for example, when the third party is a beneficiary in a trust or when they are the person for whom a provision is made in a family arrangement. This situation constitutes an anomaly to the principle that an individual who is not a party to a contract is unable to enforce said contract.
- Joint Promisee: When there are many promises, unless the contract indicates otherwise, the following individuals are obligated to fulfill the promise: If all the promisees are alive- All the promisees collectively have the right to demand performance.
- If any of the joint promisees dies: The representatives of the deceased promisee, along with the surviving promisee, have the right to request the fulfillment of the promise. If all joint promisees die, the representatives of each promisee can collectively demand the fulfillment of the promise.
Basanti Bai vs Sri Prafulla Kumar Routrai (2006)
In the case of Basanti Bai vs Sri Prafulla Kumar Routrai (2006), the Orissa High Court ruled that in the absence of a legal representative, the responsibility to fulfill the promise on behalf of the deceased party would rest upon the individual who gains ownership of the contract’s subject matters.
The case of M/S Great Eastern Energy v. M/S Jain Irrigation in 2010:
The tender stipulated a validity period of four months. The Bombay High Court ruled that it is not permissible to accept any offers after the tender period has expired. The forfeiture of the security deposit due to accepting the tender after its validity period had expired and the tenderer’s inability to perform was not inappropriate.