By performance

Legal provision

• Section 37: the parties must perform, or offer to perform, their promises. The promises bind the representatives of a promisor who dies, unless a contrary intention appears.
• Section 38: a valid offer of performance that is refused protects the promisor. It must be unconditional, made at a proper time and place, and in the case of goods allow the promisee to see that the goods are as promised.
• Section 40: a promise meant to be performed by the promisor himself must be so performed. Otherwise the promisor or his representatives may employ a competent person.
• Section 41: a promisee who accepts performance from a third person cannot afterwards enforce the promise against the promisor.
• Sections 46 to 50: time, place and manner of performance.
• Sections 51 to 54: reciprocal promises: simultaneous performance, order of performance, prevention by one party, and default in the promise to be performed first.
• Section 55: failure to perform at a fixed time, and the effect of time being of the essence.
• Section 67: a promisee who refuses reasonable facilities for performance excuses the promisor.

Meaning and definition

Discharge by performance has two forms. In actual performance, the promisor does what he promised and the promisee accepts it. In attempted performance, the promisor offers to perform, and the promisee refuses. The offer is called a tender.

The law gives weight to a proper tender because the promisor has done all he can. It would be unjust to call him a defaulter when the other side stopped performance. The rules on time, place and order give both sides a fair way to know what each must do and when.

The diagram tests whether an offer of performance is a valid tender.

Detailed explanation

Step 1: the duty to perform (section 37)

The starting rule is that promises must be kept. The duty passes to the representatives of a promisor who dies, unless the contract shows a different intention. A personal contract is the exception, because it cannot be performed by anyone else.

Step 2: tender or attempted performance (section 38)

A valid tender must meet three tests. It must be unconditional. It must be made at a proper time and place, so the promisee can ascertain that the promisor is able and willing there and then to do the whole. If goods are offered, the promisee must have a reasonable chance to see that they are the goods promised. An offer to one of several joint promisees has the same effect as an offer to all of them.

If the promisee refuses a valid tender, the promisor is not responsible for non-performance. He does not lose his rights under the contract.

Step 3: who may perform (sections 40 and 41)

If the nature of the case shows that the promisor must perform personally, he must do so. A contract to paint a picture is an example. In other cases, the promisor or his representatives may use a competent person. A promise to pay money can be met through a third person (section 40, illustration (a)).

If the promisee accepts performance from a third person, he cannot afterwards enforce the promise against the promisor (section 41). The promisee chose to accept it.

Step 4: time, place and manner (sections 46 to 50)

• No time fixed, no application needed: the promise must be performed within a reasonable time. What is reasonable is a question of fact (section 46).
• Day fixed, no application needed: the promisor may perform in the usual hours of business on that day, at the place where the promise ought to be performed (section 47).
• Day fixed, application needed: the promisee must apply for performance at a proper place and within the usual hours of business (section 48).
• No place fixed, no application needed: the promisor must ask the promisee to name a reasonable place, then perform there (section 49).
• Manner or time set by the promisee: performance may be made in any manner, or at any time, that the promisee prescribes or approves (section 50).

Step 5: reciprocal promises (sections 51 to 54)

Reciprocal promises are promises that form the consideration, or part of it, for each other (section 2(f)).

• Section 51: if the promises are to be performed simultaneously, no promisor need perform unless the other is ready and willing to perform his part. Delivery against payment is the usual case.
• Section 52: the order fixed by the contract applies. If none is fixed, the order that the nature of the transaction requires applies. A builder must build before the owner pays (illustration (a)).
• Section 53: if one party prevents the other from performing, the contract becomes voidable at the option of the party prevented. He may also claim compensation for his loss.
• Section 54: if one promise must be performed first and its promisor fails, he cannot claim the other party's performance. He must also compensate the other party for the loss.

Step 6: time of the essence (section 55)

The section has three parts.

• If a party fails to perform at the fixed time, the contract, or the part not performed, becomes voidable at the promisee's option. This applies only if the parties intended time to be of the essence.
• If time was not of the essence, the contract does not become voidable. The promisee may claim compensation for the loss caused by the delay.
• If the promisee accepts late performance of a contract that was voidable for delay, he cannot claim compensation for the delay. He may claim it only if he gives notice of that intention when he accepts. In Uttar Pradesh, the test is different: he cannot claim where, at the time of acceptance, he has waived the right (Uttar Pradesh Act 57 of 1976).

Time is not presumed to be of the essence in a sale of land. It becomes so when the contract says so clearly, or the circumstances show it. The cases below explain the rule.

Step 7: facilities for performance (section 67)

If the promisee neglects or refuses to give the promisor reasonable facilities for performance, the promisor is excused for any non-performance that results.

Time and place at a glance

Don't confuse: tender and actual performance

Both are forms of performance. Only actual performance finishes the work. A tender protects the promisor when the other side stops him.

Common mistakes

• Treating any offer as a tender. It must be unconditional, at a proper time and place, and for the whole.
• Assuming time is always of the essence. Section 55 asks what the parties intended.
• Forgetting that a personal contract must be performed by the promisor himself.
• Saying a party who defaulted on the promise to be performed first can still claim the reciprocal performance (section 54).

Apply it

Leading case laws

• Saradamani Kandappan v. S. Rajalakshmi (2011)

  Facts. A buyer agreed to buy 24 acres 95 cents in Chingleput District for Rs 3,75,000 and paid Rs 2,25,000 in instalments. She missed the last two payment dates. The sellers cancelled the agreement.

  Principle. In a sale of land, time is normally not of the essence. The intention to make it so may appear from the express terms or from the circumstances. Here the clauses on instalments made time for payment of the balance the essence, so the cancellation was justified (paras 17, 19, 20).

  Why it matters. It applies section 55 to a sale of land and discusses the rule in Chand Rani v. Kamal Rani, (1993) 1 SCC 519 (Constitution Bench). It also said, as an observation, that steep price rises call for a fresh look at the old presumption (para 27).

• K.S. Vidyanadam v. Vairavan (1997)

  Facts. A buyer agreed in December 1978 to buy a house in Madurai for Rs 60,000 within six months. He did nothing for about two and a half years and sued after prices had risen.

  Principle. Even where time is not of the essence in a land sale, the buyer must act within a reasonable time. The court looks at all the circumstances, including the time limits in the agreement.

  Why it matters. It shows that delay can still defeat a claim to enforce the contract.

How to write this answer in the exam

Key points to remember

• Performance is actual (accepted) or attempted (a tender that is refused).
• A valid tender is unconditional, at a proper time and place, and for the whole promise (section 38).
• A refused valid tender protects the promisor and keeps his rights.
• Personal contracts must be performed by the promisor. Others may be performed through a competent person (section 40).
• Accepting performance from a third person bars a later claim against the promisor (section 41).
• Time of the essence makes a late performance voidable. Otherwise only compensation is due (section 55).
• A promisee who refuses reasonable facilities excuses the promisor (section 67).

Quick self-test

Related topics

• Discharge of Contracts
• Appropriation of payments
• Performance by joint promisors
• Actual breach