CLAT PG Exam > CLAT PG Notes > Law of Contracts > Performance of Contracts
Performance of Contracts
Performance of a Contract (Section 37)
Performance means fulfilling the promises made in a contract. Both parties (promisor and promisee) must either perform or offer to perform their duties unless the law excuses them.
Types of Performance:
- Actual Performance: Both parties complete their promises (e.g., delivering goods and receiving payment).
- Attempted Performance (Tender): One party tries to perform, but the other refuses (Section 38).
Example: Anil agrees to sell a bike to Bela for ₹20,000. If Anil delivers the bike and Bela pays, it's actual performance. If Anil offers to deliver but Bela refuses, it's a tender.
Key Rule: If a tender is valid (unconditional, at the right time/place), the promisor is not liable if the promisee refuses.
Who Can Perform a Contract? (Sections 40-42)
Not everyone can perform every contract. The rules depend on the type of contract.
Who Can Perform:
- Promisor: The person who made the promise must perform it themselves if it involves personal skill (e.g., painting a portrait).
- Agent: The promisor can hire someone else to perform if the contract allows.
- Legal Representatives: If the promisor dies, their legal heirs must perform (except for personal skill contracts).
- Third Party: A third party can perform if the promisee agrees.
Joint Promises (Sections 42-45):
- If multiple people make a promise together, all are responsible for performing.
- If one joint promisor dies, their heirs are liable.
- Releasing one joint promisor doesn't free others.
Example: If Ravi and Suman promise to deliver goods to Tara, both are liable. If Ravi dies, his heirs must help Suman perform.
Time and Place of Performance (Sections 46-50)
Contracts must be performed at the right time and place as agreed.
Key Rules:
- No Time Specified: Perform within a reasonable time (Section 46).
- Time Specified: Perform exactly at the agreed time (Section 47).
- Place: Perform at the place mentioned in the contract. If no place is mentioned, the promisor must ask the promisee for a reasonable place (Section 49).
- Application: The promisor must ask the promisee to fix a time/place if needed (Section 50).
Example: If a contract says deliver goods on June 1 at Mumbai, it must happen on that date and place. If no place is mentioned, the seller asks the buyer for a location.
Reciprocal Promises (Sections 51-54)
Reciprocal promises are when both parties promise to do something for each other. There are three types:
Key Rules:
- Follow the order of performance as per the contract.
- If one party prevents the other from performing, the contract is breached.
- If one party fails to perform, the other is excused.
Example: Anil agrees to build a wall, and Bela agrees to pay after completion. Bela's payment depends on Anil's performance (conditional promise).
Impossibility of Performance (Section 56)
A contract becomes void if it's impossible to perform due to reasons beyond the parties' control.
Types of Impossibility:
- Initial Impossibility: If the contract was impossible from the start, it's void.
- Subsequent Impossibility: If it becomes impossible later (e.g., due to a new law or destruction of the subject matter), the contract is void.
Exceptions:
- Difficulty or financial loss doesn't count as impossibility.
- Personal incapacity (e.g., illness) doesn't excuse performance unless it's a personal skill contract.
Example: If Anil agrees to deliver 100 kg of wheat, but a flood destroys the crop, the contract becomes void due to subsequent impossibility.
Appropriation of Payments (Sections 59-61)
When a debtor owes multiple debts and makes a payment, there are rules on how the payment is applied.
Rules:
- Debtor's Choice: The debtor can decide which debt the payment applies to (Section 59).
- Creditor's Choice: If the debtor doesn't specify, the creditor can apply it to any lawful debt (Section 60).
- Default Rule: If neither specifies, the payment goes to the oldest debt first (Section 61).
Example: If Anil owes Bela ₹10,000 and ₹5,000 and pays ₹5,000, he can say it's for the ₹5,000 debt. If he doesn't specify, Bela can choose, or it goes to the older debt.
MULTIPLE CHOICE QUESTIONTry yourself: What must both parties do in a contract?
Contracts That Need Not Be Performed (Sections 62-67)
Some contracts don't need to be performed under certain conditions.
Key Situations:
- Novation: Replacing the old contract with a new one (Section 62).
- Rescission: Canceling the contract by mutual agreement.
- Alteration: Changing the contract terms with consent.
- Neglect by Promisee: If the promisee refuses to provide facilities for performance, the promisor is excused (Section 67).
Example: If Anil and Bela agree to cancel a contract for delivering goods and sign a new one for a different item, it's novation.
What Happens If a Contract Isn't Performed?
Non-performance leads to a breach of contract. The other party can:
- Claim damages (compensation).
- Seek specific performance (court orders performance).
- Request an injunction (court stops certain actions).
Note: Breach remedies are covered under Sections 73-75, but they relate to performance failure.
Key Sections to Remember
- Section 37: Duty to perform.
- Section 38: Refusal of tender.
- Sections 40-42: Who performs the contract.
- Sections 46-50: Time and place of performance.
- Sections 51-54: Reciprocal promises.
- Section 56: Impossibility of performance.
- Sections 59-61: Appropriation of payments.
- Section 62: Novation, rescission, alteration.
The document Performance of Contracts is a part of the CLAT PG Course Law of Contracts.
All you need of CLAT PG at this link: CLAT PG
FAQs on Performance of Contracts
| 1. What is the significance of Section 37 in the context of contract performance? |  |
Ans.Section 37 of the Indian Contract Act outlines the general principle that parties to a contract must perform their respective obligations as agreed. It emphasizes that a contract must be performed in accordance with its terms and conditions, and failure to do so can lead to legal consequences.
| 2. Who is entitled to perform a contract according to Sections 40-42? | |
Ans.Sections 40 to 42 specify that a contract may be performed by the promisor or their authorized agent. Additionally, if the contract involves personal skill or consideration, it must be performed by the promisor themselves unless expressly permitted otherwise. In cases of death, the obligations may pass to the legal representatives.
| 3. How does Section 56 address impossibility of performance? | |
Ans.Section 56 deals with the doctrine of frustration, stating that a contract becomes void if the performance becomes impossible due to an unforeseen event. This includes situations where the subject matter of the contract is destroyed or an act becomes illegal after the contract is made.
| 4. What are reciprocal promises as defined in Sections 51-54? | |
Ans.Reciprocal promises are mutual promises made by the parties in a contract, where one party's performance is contingent upon the other party's performance. Sections 51 to 54 elaborate on the obligations and timing of these promises, highlighting that they must be performed simultaneously unless otherwise specified.
| 5. What are the consequences if a contract is not performed? | |
Ans.If a contract is not performed, the aggrieved party may seek remedies, including specific performance, damages for breach of contract, or cancellation of the contract. The choice of remedy depends on the nature of the breach and the terms outlined in the contract.
About this Document
4.65/5
Rating
Apr 20, 2026
Last updated
Document Description: Performance of Contracts for CLAT PG 2026 is part of Law of Contracts preparation.
The notes and questions for Performance of Contracts have been prepared according to the CLAT PG exam syllabus. Information about Performance of Contracts covers topics
like and Performance of Contracts Example, for CLAT PG 2026 Exam. Find important definitions, questions, notes, meanings, examples, exercises and tests below for Performance of Contracts.
Introduction of Performance of Contracts in English is available as part of our Law of Contracts
for CLAT PG & Performance of Contracts in Hindi for Law of Contracts course.
Download more important topics related with notes, lectures and mock test series for CLAT PG
Exam by signing up for free. CLAT PG: Performance of Contracts
Description
Performance of Contracts of Law of Contracts covers all the important topics, helping you prepare for the CLAT PG exam on EduRev. Start for free!
Information about Performance of Contracts
In this doc you can find the meaning of Performance of Contracts defined & explained in the simplest way possible. Besides explaining types of
Performance of Contracts theory, EduRev gives you an ample number of questions to practice Performance of Contracts tests, examples and also practice CLAT PG
tests
Related Searches
Exam, practice quizzes, Performance of Contracts, Sample Paper, mock tests for examination, study material, Free, Performance of Contracts, Extra Questions, Summary, MCQs, Important questions, pdf , video lectures, ppt, Previous Year Questions with Solutions, Objective type Questions, Semester Notes, shortcuts and tricks, Performance of Contracts, past year papers, Viva Questions;