2. Discharge by Performance — Who Must Perform, and Tender of Performance

Performance is the most natural way a contract ends — each side simply does what they promised. But Indian contract law has precise rules about who may perform on a party's behalf, and what happens when a valid offer to perform is wrongly refused.

The Problem This Topic Solves

Two everyday situations cause confusion here. First: if A owes B a debt, can A's employee, agent, or even a stranger pay it on A's behalf — or must A personally hand over the money? Second: what happens if a promisor genuinely tries to perform exactly as promised, but the other side unreasonably refuses to accept it? Is the promisor now in breach, or is the promisor let off the hook? Sections 37 to 55 of the Indian Contract Act, 1872 answer both questions with clear, examinable rules.

Actual Performance vs. Attempted Performance (Tender)

"Actual performance" is when a promisor does exactly what was promised, and the promisee accepts it — this discharges the contract outright. But sometimes the promisor is ready and willing to perform, offers to do so, and the promisee simply refuses to accept. This is called "tender" or "attempted performance," and Section 38 gives it real legal weight: where a promisor has made a valid tender and it is not accepted, the promisor is not responsible for non-performance, and does not lose any rights under the contract.

What Makes a Tender Valid — Section 38

A tender is only valid if it satisfies three conditions:

• It must be unconditional — the promisor cannot attach new terms while offering to perform
• It must be made at a proper time and place, and under circumstances that give the promisee a reasonable opportunity to check that the thing offered is what was promised (for a tender of goods, this includes a reasonable opportunity to inspect them)
• It must offer the whole obligation, not part of it — a tender of only part of what is owed is not a valid tender under the Act

A useful, long-settled illustration of the "proper time" requirement comes from English law: in Startup v. Macdonald (1843), a seller tendered goods to a buyer within the last permitted day of the contract period, but very late in the evening. The case is a classic teaching example for the idea that a tender delivered strictly within the time limit can still be challenged if the hour makes it unreasonable for the other side to receive and check it — reinforcing that "proper time" is judged practically, not just by the calendar date.

Who Must Perform the Promise — Section 40

Section 40 draws a line between two kinds of contracts:

• If the contract shows that the parties intended the promisor to perform personally, or if the nature of the contract requires personal skill or credit (for example, a contract to paint a portrait, or to perform in a concert), the promisor must perform it himself
• In every other case, the promisor, or his representatives, may employ a competent person to perform it. The promisee cannot object, since what matters to the promisee is that the promise is fulfilled, not who fulfils it

Effect of Accepting Performance from a Third Person — Section 41

If a promisee accepts performance of the promise from a third person, the promisee cannot afterwards enforce the same promise against the original promisor — even if that third person had no authority from the promisor to perform it. Once accepted, the matter is closed as far as the promisee's claim against the promisor goes.

Time and Place of Performance — Sections 46 to 50

Where the contract does not fix a time, and no application by the promisee is needed, the promise must be performed within a reasonable time — a question of fact in each case (Section 46). Where a time is fixed, performance must happen during the usual hours of business, on the day and at the place the promise ought to be performed (Section 47). Where no place is fixed, it is the promisor's duty to ask the promisee to name a reasonable place, and then to perform there (Section 49). If the promisee has prescribed a particular manner or time for performance and the promisor performs accordingly, that performance is treated as properly made (Section 50).

Reciprocal Promises — Sections 51 to 54

Many contracts contain reciprocal promises — each party promises something in exchange for the other's promise. Section 51 provides that where the contract shows the promises are to be performed simultaneously, a promisor need not perform unless the promisee is ready and willing to perform their own part. Section 52 says the order of performing reciprocal promises is fixed by the contract itself if it states one; otherwise, the order follows what the nature of the transaction requires. Section 53 protects a party against the other party's own conduct: if one party prevents the other from performing, the contract becomes voidable at the option of the prevented party, who may also claim compensation for any loss caused by the prevention.

Effect of Failure to Perform at a Fixed Time — Section 55

Where time is of the essence of the contract and a party fails to perform by the fixed time, the contract (or the undone part of it) becomes voidable at the option of the promisee. Where time is not of the essence, the contract does not become voidable merely because of delay, though the promisee can claim compensation for any loss caused by the delay. Whether time is "of the essence" depends on the type of contract — courts generally treat time as essential in most commercial contracts for the sale of goods, but not as essential (unless expressly stated) in contracts for the sale of immovable property.

• Section 38 — the three conditions of a valid tender: unconditional, proper time and place, whole obligation
• Effect of a valid but refused tender — the promisor is discharged from liability for non-performance and keeps all rights under the contract
• Section 40 — personal-skill contracts must be performed personally; others may be performed through a competent representative
• Section 55 — the time-is-of-the-essence distinction and its consequence (voidable vs. merely compensable)

• Section 67 — if the promisee fails to give the promisor the reasonable facilities that the circumstances require for performance, the promisor is excused for any resulting non-performance

Quick Reference — Time and Place Defaults

A Practical Example

A tailor agrees to stitch and deliver a wedding suit to a customer by 10 a.m. on the wedding day, at the tailor's shop. The tailor has the finished suit ready and available at the shop from 9 a.m., but the customer does not turn up until 2 p.m. and then refuses to accept the suit, claiming the tailor "never delivered it." Under Section 38, the tailor's readiness and availability at the agreed time and place is a valid tender — since the customer failed to accept it, the tailor is not liable for non-performance and can still claim the agreed price.

Quick Revision Points

• Tender (Section 38) = a valid, unaccepted offer to perform; the promisor is fully discharged from liability once tender is proved
• Valid tender needs: unconditional, proper time/place, whole obligation
• Section 40: personal contracts need personal performance; others can be delegated
• Section 41: accepting performance from a third party bars a later claim against the original promisor
• Sections 46–50: reasonable time/place rules when the contract is silent
• Sections 51–54: reciprocal promises, order of performance, and the effect of one party preventing the other
• Section 55: time-of-the-essence determines whether delay makes the contract voidable or only gives a right to compensation