There are at least two parties to a contract, a promisor, and a promisee. A promisee is a party to which a promise is made and a promisor is a party which performs the promise. Three sections of the Indian Contract Act, 1872 define who performs a contract – Section 40, 41, and 42. In this article, let us take a look at the following sections to understand the concept of the performance of a contract better.
Section 40
Section 40 of the Indian Contract Act, 1872 states
If the nature of a contract indicates that either of the parties intended that the promise contained in the contract must be performed by the promisor himself
- then the promisor is obligated to perform the promise
- else the promise can be performed by the promisor or his representatives or an employed agent.
Let’s look at some examples: Peter promises to pay Rs 50 to John. In this case, Peter can perform the promise himself by paying the money to John or can ask someone else to pay him. Also, if Peter dies before fulfilling his promise, then his representatives are required to perform the promise or employ someone to do the same.
We will take a look at another example. Peter is a singer and he promises to sing a song at John’s wedding reception. In this case, the nature of the contract requires Peter to perform the promise himself. He cannot delegate it to someone. So, there are three possibilities for the performance of the promise. It can be done by the promisor, his representatives or his agent, depending on the nature of the contract.
Promisor Performs the Promise
If a contract indicates that the parties intended for the promisor to fulfil the promise himself, then the promisor is obligated to perform the promise. Usually, these include promises which involve personal skills, experience, or expertise and are usually based on trust between the promisor and the promisee.
Example 2 cited above about Peter singing at John’s wedding reception is a good example of a personal skill being required to perform the promise.
Learn Capacity to Contract here.
Agent Performs the Promise
If the contract does not require the personal consideration of the promisor, then the promisor can employ a competent person to perform the promise. Example 1 cited above is a good example of Peter employing an agent to pay Rs 50 to John.
Legal Representatives Perform the Promise
If the promisor dies before performing the promise, then the legal representatives become responsible for the same. If the promise involves the utilization of personal skills or expertise, then the consideration ceases with the death of the promisor.
However, in all other scenarios, the legal representatives are obligated to perform the promise unless the contract has a contrary intention specified. Also, the liability of the legal representatives is limited to the value of the property inherited by them.
Peter promises to pay John an amount of Rs 10,000 within one month of delivery of certain goods. John delivers the goods. However, Peter dies before he can pay the money to John. Now, it is his legal representative’s responsibility to ensure that John receives the payment. The representative can pay himself or employ someone for the same.
Section 41
If the promisee accepts the performance of a promise from a third person, then he cannot enforce it against the promisor at a later date. Hence, the performance of the promise by a third-party discharges the promisor of his obligations even if he has not authorized the third-party to perform the promise.
Peter promises to pay John an amount of Rs 10,000 for painting his house. John finishes the job but Peter is unable to pay him. Oliver, a common friend of Peter and John, offers Rs 6,000 to John on behalf of Peter, which he accepts. Eventually, John files a suit for recovery against Peter.
The Court holds that:
- John accepted Rs 6,000 from a third-person.
- Peter has not authorized the third-person.
- Hence, John’s act has discharged Peter of his liability to pay the entire amount.
- John can only claim Rs 4,000 from Peter now.
Section 42
If the promisors agree to perform a promise together – joint promise – then they are jointly obligated to fulfil the promise, unless the contract specifies a contrary intention. Also, if any of the promisors die, then their legal representatives must fulfil the promise jointly with the surviving promisors. If all the promisors die, then the legal representatives of each of them must perform the promise jointly.
Peter, John, and Oliver jointly promise to pay Rs 9,00,000 to Rita. However, Peter dies before paying the money. In this case, Peter’s representative – Jack, is now jointly responsible along with John and Oliver to pay Rita the amount.
Unfortunately, before Rita receives her money, all the three promisors, i.e. Peter, John, and Oliver die. In this case, Jack – Peter’s representative, Tony – John’s representative, and Sam – Oliver’s representative must jointly pay the amount to Rita.
Learn Discharge of a Contract here in detail.
Solved Example for You
Q: Peter and John are childhood friends. Peter is a painter and agrees to paint John’s c for a payment of Rs 20,000. However, he is in urgent need and requests John to pay him in advance. John obliges and they enter into a contract for the same. Peter starts making John’s portrait. However, before he can finish, he dies in a car accident. Jack inherits Peter’s property. Can John file a suit for recovery since he had already made the payment but did not get his portrait in return?
Ans: Since the contract was based on personal consideration, that is Peter’s painting skills and there was no clause in the contract regarding a refund if Peter fails to deliver the portrait, John cannot file a suit for recovery of his money.
K and A had entered into a contract where K was to supply 50,000 phones to A within 2 months from the date of signing of contract. K was to procure the phones from China and deliver the same to A. The rate of the phone was Rs. 5000/- a piece (inclusive of all taxes and duties). At the time of the execution of the contract, the duty was at 5% (five percent). Immediately after the execution of the Agreement, India had increased the duties to 1000% (one thousand percent). Therefore, K was finding it difficult to sell the phones at the price agreed earlier. In the circumstances, kindly advise:
a. How can K discharge such a contract?
b. How can A enforce such a contract?
K can “Discharge of Contract” Under Impossibility of performance, during post-contractual impossibility
While the following conditions are satisfying
The act should have become impossible after the formation of the contract.
2. The impossibility should have been caused by a reason of some event which was beyond the control of the promissory.
3. The impossibility must not be the result of some act or negligence of the promisor himself.
K can discharge the contract by imposibility or frustration due to unseen changes
In light of the case of registered trustees of the cashew nuts industry development fund V cashew nuts board of Tanzania,civil appeal no:18 of 2001 court of appeal of Tanzania at Dar es saalam (unreported) and the cashew nuts industry act no 18 of 2009. Explain the parties to an agency (name of parties) it provided case and the way in which it was created