BCOC-133 BUSINESS LAW CHAPTER-7 PERFORMANCE AND DISCHARGE

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BCOC-133 BUSINESS LAW CHAPTER-7 PERFORMANCE AND DISCHARGE

MEANING OF PERFORMANCE

In the concept of contract, “performance” refers to the fullfilment of obligations or duties as specified in the contractual agreement .

TYPE OF PERFORMANCE

1. Actual performance:- occur when party fulfill its contractual obligations completely, leaving nothing more to be done

2. Attempted performance:- when the promisor is willing and ready to fulfill their obligation but the promise refuses to accept the performance

KINDS OF TENDER

Tender refers the offer to performance by one party to the other 1. Tender of goods and services :

  • -a contract involving goods or services is discharged when the goods are tendered according to the contract terms

  • If the good and services are refused there is no obligation to offer them again, and the promisor relieved of liability

  • The promisor can pursue legal action against the promise for non- acceptance

    2. Tender of money:-
    • when a debtor makes a valid tender (offer to pay) to the creditor, and the

    creditor refuses the debtor’s liability to pay remains
    • the debtor however is not liable for interest from the date of the valid

    tender, as interest becomes payable only upon rejection

    ESSENTIAL FOR VALID TENDER

  1. Unconditional :- a valid tender must be unconditional , adhering to the terms of the contract, conditional offers are invalid

  2. Timeliness and location:- the tender must occur at the agreed-upon time and place. Deviations, such as delivering goods after business hours, may render the tender invalid

  3. Opportunity for inspection:- in the goods, the promisee must have a reasonable opportunity to inspect them to ensure they meet contractual obligation

  4. Whole obligation:- the tender should cover the entire obligation, partial tenders or instalment payments may be considered invalid

  5. Recipient of tender:- the tender must made to the promise or their authorized agent. A tender to stranger is not valid

  6. Exact amount in legal tender:- in money transaction, the tender must be of the exact amount due in legal tender, payment by cheque is valid if the recipient is willing to accept it

EFFECT OF REFUSEL TO PERFORM PROMISE WHOLLY

The promisee can terminate the contract if the party refuses or renders themselves incapable of ful1illing their promise entirely , however if the promise indicates acceptance through words or conduct, terminating the contract becomes challenging . this acceptance implies an agreement to continue the contractual relationship even after breach, but the compensation for damages still be looked for

WHO CAN DEMAND PERFOMANCE

  1. Pomisee

  2. Legal representative:- in the event the promisor’s death, their legal representative can demand performance unless the contract is personal nature

  3. Third party:-in certain exceptional cases third party might able to demand performance

  4. Joint promise:-if the promise involve two or more persons jointly, the performance can be demanded jointly during their lifetime

WHO MUST PERFORM

  1. Promisor himself:- if the nature of the contract suggest that promise involves personal skill, taste or art the promisor must perform personally

  2. Promisor or agent:- if the contract doesn’t required person skill, the promisor or any competent person employed by them can perfume the contract

  3. Legal representative:- contract not required personal skill can be performed by legal representative after death of the promisor

  4. Third person

  5. Performance of joint promises:-joint promisor must ful1ill the promise jointly

    during their lifetime

TIME AND PLACE FOR PERFORMANCE
1. Performance within reasonable time:- when the time of performance is not

specified in the contract , and the promisor is to perform without being asked, it

must done within reasonable time
2. Performance of promise where time is specified :- if the time for

performance specified in the contract and the promisor must perform without application, it should be done specified day during business hours at the designated place

3. Performance on application by promise:- if the day of performance specified , but the promisor has not committed to performing without application, the promise must apply for performance at an appropriate place and during business hour

4. Performance without specified place and application:- when a promise is to performed without application , and no place is specified, the promisor must as the promise to fix reasonable place for performance

5. Performance prescribed by promisee :- if the promise prescribed manner and time of performance the promisor must follow those instruction

PERFORMANCE OF RECIPROCAL PROMISES

  1. Mutual and independent:-each party performs independently without waiting for each other

  2. Conditional and dependent:- the performance one party depends on other party’s performance

  3. Mutual and concurrent:- both parties must perform their promises simultaneously

RULES FOR THE PERFOMANCE OF RECIPROCAL PROMISES

  1. Mutual and concurrent:-the proser need not perform unless the promise ready and willing to perform

  2. Mutual and dependent :-failure by the first party prevents them claiming performance from other party

  3. Mutual and independent :- parties must perform independently ,if one party fails, the other cannot excuse themselves from performance but may claim damages

EFFECT OF PREVENTING RECIPROCAL PROMISES:- if one party prevents reciprocal promises, the contract becomes voidable at the option of the party prevented , compensation can be claimed for any loss suffered due to non-performance.

ASSIGNMENT OF CONTRACT

It involves the transfer of right and liabilities from one party to third party, it typically completed through a written instrument
WAY OF ASSIGNMENT

a) Assignment by the act of parties

  1. Liability or obligation:- liability under contract cannot be assigned without the consent of the promise. However the promisor may transfer the liability to third person with the consent of both the promise and the transferee, known as “novation”

  2. Rights and bene1its:- rights and bene1its under a non-personal contract can be assigned

  3. Actionable claim:-an actionable claim (book debts, money debts) can be assigned by an instrument writing with notice to the debtor

b) Assignment by operation of law:-contract not of a personal nature get assigned due to operation of law in case of death or insolvency, rights and obligations pass on to heirs or legal representative upon death

APPROPRIATION OF PAYMENT

It refers to the application of payment when debtor owe multiple distinct debts to one creditor

RULES FOR APPROPRIATION OF PAYMENT 1. Express or implied limitation by debtor 2. No express or implied intimation
3. Neither party appropriate

MODE OF DISCHARGE OF A CONTRACT:- 1. DISCHARGE BY PERFOMANCE

The most common mode of contract discharge is through actual or attempted performance

2. Discharge by mutual agreement:-
(a) Novation:- it involves substituting a new contract for existing one ,either between the same or different parties. The new contract’s consideration is the discharge of the original contract
(b)Rescission:- it is the cancellation of a contract by mutual agreement , it canceling original contract without substituting
(c)Alteration:- a change in one or more contract terms with the consent of all parties termination the original contract
(d)Remission:- accepting a lesser sum or lesser fulfillment than contracted for discharges the debt
(e)Waiver:- abandoning or intentionally relinquishing a right under the contract releases the other party from obligation

DISCHARGE LAPSE OF TIME:- rights and obligation under contract must be enforced within specified period, termed the “period” of limitation, prescribed by the limitation Act for various contract

DISCHARGE BY OPERATION OF LAW

  1. Death of the promisor:-contract involving personal skill or ability of the promisor

    end with their death

  2. Insolvency:- if declared insolvent, the promisor is discharged from existing

    obligation

  3. Merger:- inferior rights merging into superior ones in the same party termination

    the earlier contract

  4. Material alteration:- unapproved material changes in written contracts by one

    party lead to termination

DISCHARGE BY IMPOSSIBILITY OF PERFORMANCE

Contracts become void due to impossibility , initial(known , unknown) or subsequent (supervening). Supervening impossibility conditions must be met for discharge

EFFECTS OF SUPERVENING IMPOSSIBILITY

1. Contract becomes void
2. Compensation for non-performance if promisor alone knew impossibility 3. Bene1it received under the void contract must be restored

DISCHARGE BY BREACH:-breach contract occurs one party fails to perform or refuses to perform or indicates an intention not to fulfill their contractual obligation
Breach occurs through actual or anticipatory breach . the aggrieved party has right to claim compensation or damages

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