Performance of Contract (Part-2) - The Indian Contract Act 1872 CA CPT Notes | EduRev

Business Laws for CA Foundation

Created by: Sushil Kumar

CA CPT : Performance of Contract (Part-2) - The Indian Contract Act 1872 CA CPT Notes | EduRev

The document Performance of Contract (Part-2) - The Indian Contract Act 1872 CA CPT Notes | EduRev is a part of the CA CPT Course Business Laws for CA Foundation.
All you need of CA CPT at this link: CA CPT

EFFECT OF REFUSAL TO ACCEPT OFFER OF PERFORMANCE:

According to Section 38 of the Act - where a promisor has made an offer of performance to the promisee, and the offer has not been accepted, then the promisor is not responsible for non performance, nor does he thereby lose his rights under the contract.

Every such offer must fulfill certain conditions which are as follows, namely:
(i) it must be unconditional;
(ii) it must be made at a proper time and place, and under such circumstances that the person to whom it is made may have a reasonable opportunity of ascertaining that the person by whom it is made is able and willing there and then to do the whole of what he is bound by his promise to do;
(iii) if the offer is an offer to deliver anything to the promisee, then the promisee must have a reasonable opportunity of seeing that the thing offered is the thing which the promisor is bound by his promise to deliver.

An offer to one of several joint promisees has the same legal consequences as an offer to all of them.

EFFECT OF A REFUSAL OF PARTY TO PERFORM PROMISE:

According to Section 39, when a party to a contract has refused to perform, or disabled himself from performing his promise in its entirety, the promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance.
Example: A, singer, enters into a contract with B, the Manager of a theatre, to sing at his theatre two nights in every week during next two months, and B engages to pay her Rs. 1,00,000 for each night’s performance. On the sixth night, A willfully absents herself from the threatre. B is at liberty to put an end to the contract.

Analysis of Section 39
From language of Section 39 it is clear that in the case under consideration, the following two rights accrue to the aggrieved party, namely,

(a) to terminate the contract;
(b) to indicate by words or by conduct that he is interested in its continuance.

In case the promisee decides to continue the contract, he would not be entitled to put an end to the contract on this ground subsequently. In either case, the promisee would be able to claim damages that he suffers as a result on the breach.

LIABILITY OF JOINT PROMISOR & PROMISEE:

Devolution of joint liabilities (Section 42)
When two or more persons have made a joint promise, then, unless a contrary intention appears by the contract, all such persons, during their joint lives and after the death of any of them, his representative jointly with the survivor or survivors and after the death of last survivor, the representatives of all jointly, must fulfil the promise.

Analysis of Section 42
If two or more persons have made a joint promise, ordinarily all of them during their life-time must jointly fulfill the promise. After death of any one of them, his legal representative jointly with the survivor or survivors should do so. After the death of the last survivor the legal representatives of all the original copromisors must fulfil the promise.

Example: X, Y and Z who had jointly borrowed money must, during their life-time jointly repay the debt. Upon the death of X his representative, say, S along with Y and Z should jointly repay the debt and so on.

This rule is applicable only if the contract reveals no contrary intention.

We have seen that Section 42 deals with voluntary discharge of obligations by joint promisors. But if they do not discharge their obligation on their own volition, what will happen? This is what Section 43 resolves.

Any one of joint promisors may be compelled to perform- Section 43
When two or more persons make a joint promise, the promisee may, in the absence of express agreement to the contrary, compel any one or more of such joint promisors to perform the whole of the promise.

Each promisor may compel contribution: Each of two or more joint promisors may compel every other joint promisor to contribute equally with himself to the performance of the promise, unless a contrary intention appears from the contract.

In other words, if one of the joint promisors is made to perform the whole contract, he can call for a contribution from others.

Sharing of loss by default in contribution: If any one of two or more joint promisors makes default in such contribution, the remaining joint promisors must bear the loss arising from such default in equal shares.

Explanation to Section 43
Nothing in this section shall prevent a surety from recovering, from his principal, payments made by the surety on behalf of the principal, or entitle the principal to recover anything from the surety on account of payment made by the principal.

Example 1: A, B and C jointly promise to pay D  Rs. 3,00,000. D may compel either A or B or C to pay him Rs. 3,00,000.

Example 2: A, B and C are under a joint promise to pay D Rs. 3,00,000. C is unable to pay anything A is compelled to pay the whole. A is entitled to receive Rs. 1,50,000 from B.

We thus observe that the effect of Section 43 is to make the liability in the event of a joint contract, both joint & several, in so far as the promisee may, in the absence of a contract to the contrary, compel anyone or more of the joint promisors to perform the whole of the promise.

Effect of release of one joint promisor- Section 44
The effect of release of one of the joint promisors is dealt with in Section 44 which is stated below:
Where two or more persons have made a joint promise, a release of one of such joint promisors by the promisee does not discharge the other joint promisor or joint promisors, neither does it free the joint promisors so released from responsibility to the other joint promisor or promisors.

Example: ‘A’, ‘B’ and ‘C’ jointly promised to pay Rs. 9,00,000 to ‘D’. ‘D’ released ‘A’ from liability. In this case, the release of ‘A’ does not discharge ‘B’ and ‘C’ from their liability. They remain liable to pay the entire amount of  Rs. 9,00,000 to ‘D’. And though ‘A’ is not liable to pay to ‘D’, but he remains liable to pay to ‘B’ and ‘C’ i.e. he is liable to make the contribution to the other joint promisors.

Rights of Joint Promisees
The law relating to Devolution of joint rights is contained in Section 45 which is reproduced below:
“When a person has made a promise to two or more persons jointly, then unless a contrary intention appears''.

from the contract, the right to claim performance rests, as between him and them, with them during their joint lives, and after the death of any of them, with the representative of such deceased person jointly with the survivor or survivors, and after the death of the last survivor, with the representatives of all jointly”.

Example: A, in consideration of Rs. 5,00,000 rupees lent to him by B and C, promises B and C jointly to repay them that sum with interest on a specified day but B dies. In such a case right to demand payment shall rest with B’s legal representatives, jointly with C during C’s life-time, and after the death of C, with the legal representatives of B and C jointly.

TIME AND PLACE FOR PERFORMANCE OF THE PROMISE:

The law on the subject is contained in Sections 46 to 50 explained below:
(i) Time for performance of promise, where no application is to be made and no time is specified - Section 46
Where, by the contract, a promisor is to perform his promise without application by the promisee, and no time for performance is specified, the engagement must be performed within a reasonable time.
Explanation to Section 46 The expression reasonable time is to be interpreted having regard to the facts and circumstances of a particular case.
(ii) Time and place for performance of promise, where time is specified and no application to be made – Section 47
When a promise is to be performed on a certain day, and the promisor has undertaken to perform it without application by the promise, the promisor may perform it at any time during the usual hours of business, on such day and the place at which the promise ought to be performed.

Example: If the delivery of goods is offered say after sunset, the promisee may refuse to accept delivery, for the usual business hours are over. Moreover, the delivery must be made at the usual place of business.
(iii) Application for performance on certain day to be at proper time and place – Section 48
When a promise is to be performed on a certain day, and the promisor has not undertaken to perform it without application by the promisee, it is the duty of the promisee to apply for performance at a proper place and within the usual hours of business.
Explanation to Section 48 states that the question “what is a proper time and place” is, in each particular case, a question of fact.
(iv) Place for the performance of promise, where no application to be made and no place fixed for performance - Section 49
When a promise is to be performed without application by the promisee, and no place is fixed for the performance of it, it is the duty of the promisor to apply to the promisee to appoint a reasonable place for the performance of the promise, and to perform it at such a place.

Example: A undertakes to deliver a thousand maunds of jute to B on a fixed day. A must apply to B to appoint a reasonable place for the purpose of receiving it, and must deliver it to him at such place.
(v) Performance in manner or at time prescribed or sanctioned by promisee - Section 50
The performance of any promise may be made in any such manner, or at any time which the promisee prescribes or sanctions.

Offer running on EduRev: Apply code STAYHOME200 to get INR 200 off on our premium plan EduRev Infinity!

Complete Syllabus of CA CPT

Dynamic Test

Content Category

Related Searches

Sample Paper

,

Performance of Contract (Part-2) - The Indian Contract Act 1872 CA CPT Notes | EduRev

,

shortcuts and tricks

,

Free

,

past year papers

,

Previous Year Questions with Solutions

,

MCQs

,

Performance of Contract (Part-2) - The Indian Contract Act 1872 CA CPT Notes | EduRev

,

Viva Questions

,

Important questions

,

mock tests for examination

,

Summary

,

ppt

,

video lectures

,

pdf

,

Objective type Questions

,

practice quizzes

,

study material

,

Performance of Contract (Part-2) - The Indian Contract Act 1872 CA CPT Notes | EduRev

,

Extra Questions

,

Exam

,

Semester Notes

;