Cheat Sheet: Performance and Discharge of Contracts

1. Performance of Contract

1.1 General Provisions

1.2 By Whom Contract Must Be Performed

1.3 Joint Promises - Section 42 to 44

1.4 Devolution of Joint Rights and Liabilities - Section 45

• When contract contains promise in favor of two or more promisees, right to claim performance rests with them jointly during their joint lives
• After death of any promisee, right survives to surviving promisees alone
• On death of last survivor, right passes to legal representatives of last survivor

1.5 Time and Place of Performance

1.5.1 Time - Section 46 and 47

1.5.2 Place - Section 48 and 49

1.6 Performance of Reciprocal Promises - Section 51 to 54

1.6.1 Section 51 - Simultaneous Performance

• Promises forming consideration for each other must be performed simultaneously unless contract indicates order of performance
• Promisor need not perform unless promisee is ready and willing to perform reciprocal promise

1.6.2 Section 52 - Order of Performance

• Where order of performance is fixed by nature or terms, promises must be performed in that order
• Subsequent promise need not be performed until prior promise is completed

1.6.3 Section 53 - Failure to Perform at Fixed Time

• When party fails to perform promise at fixed time and time was essence, contract becomes voidable
• Promisee may rescind contract unless he has accepted performance or otherwise waived right

1.6.4 Section 54 - Effect of One Party Preventing Other

• When promisee prevents promisor from performing, contract becomes voidable at option of promisor
• Promisor is entitled to compensation for any loss sustained through non-performance

1.7 Appropriation of Payments - Section 59 to 61

2. Discharge of Contract

2.1 Modes of Discharge

2.2 Discharge by Agreement

2.2.1 Novation - Section 62

• Substitution of new contract for existing contract
• New contract may substitute new parties or alter terms and conditions
• Requires consent of all parties
• Original contract stands discharged and new contract comes into operation

2.2.2 Rescission - Section 62

• Mutual agreement to cancel contract
• Both parties agree to discharge each other from obligations
• Requires consideration or must be under seal
• May be express or implied from conduct

2.2.3 Alteration - Section 62

• Material change in one or more terms of contract with mutual consent
• Original contract discharged and new contract with altered terms comes into effect
• Must be supported by fresh consideration

2.2.4 Remission - Section 63

2.2.5 Waiver - Section 63

• Intentional relinquishment of known right by promisee
• May extend time for performance
• No consideration required
• May be express or implied from conduct

2.3 Discharge by Impossibility of Performance - Section 56

2.3.1 Initial Impossibility

• Agreement to do impossible act is void ab initio
• Impossibility existing at time of contract but unknown to parties
• Contract void under Section 56

2.3.2 Supervening Impossibility

2.3.3 Doctrine of Frustration

• Applies when supervening event strikes at root of contract
• Performance not literally impossible but fundamentally different from what was agreed
• Must render performance radically different, not merely more difficult or expensive
• Self-induced frustration does not discharge contract

2.3.4 Limitations - Impossibility Not a Defense

• Difficulty, inconvenience, or commercial hardship does not discharge contract
• Impossibility due to promisor's own default
• Where promisor has agreed to perform despite impossibility
• Where impossibility is temporary and contract can still be performed

2.4 Discharge by Breach

2.4.1 Actual Breach

2.4.2 Anticipatory Breach - Section 39

• Party repudiates contract before time for performance arrives
• May be express (declaration of intention not to perform) or implied (by conduct making performance impossible)
• Aggrieved party may either treat contract as rescinded immediately or wait till time of performance
• If waits, contract remains alive for benefit of both parties and all defenses available
• If treats as rescinded, may sue immediately for damages without waiting for due date

2.5 Contracts Not Requiring Performance - Section 62

• If parties to contract agree to substitute new contract or rescind or alter existing contract, original contract need not be performed
• Discharge by mutual agreement requires consent of all parties
• New agreement must be supported by consideration unless under seal

2.6 Effect of Novation, Rescission, and Alteration - Section 62

2.7 Consequences of Non-Performance or Refusal

• Promisee entitled to put an end to contract if promisor refuses to perform (Section 39)
• Promisee may claim damages for breach
• If breach is material, promisee may terminate contract and refuse to perform his part
• If breach is minor, promisee may claim damages but must perform his part

3. Contingent Contracts - Section 31 to 36

3.1 Definition - Section 31

• Contract to do or not to do something if some event, collateral to contract, does or does not happen
• Performance depends on happening or non-happening of uncertain future event
• Event must be collateral to contract, not forming part of reciprocal promises

3.2 Rules Governing Contingent Contracts

3.3 Distinction from Wagering Agreements

4. Quasi-Contracts - Section 68 to 72

4.1 Nature of Quasi-Contracts

• Not actual contracts but obligations created by law to prevent unjust enrichment
• Based on principle of equity: no person should unjustly benefit at another's expense
• No actual agreement between parties but law implies obligation
• Remedy is restitution, not damages for breach

4.2 Types of Quasi-Contracts

4.2.1 Section 68 - Necessaries Supplied to Incompetent Person

• Person supplying necessaries suited to condition in life of person incapable of contracting is entitled to reimbursement from property of such person
• Applies to minors, persons of unsound mind, persons disqualified by law
• Must be necessaries, not luxuries
• Supplier entitled to reasonable price, not necessarily contract price

4.2.2 Section 69 - Reimbursement of Person Paying Money Due by Another

• Person who is interested in payment of money which another is bound by law to pay, and who pays it, is entitled to reimbursement
• Payer must have interest in making payment
• Payment must discharge legal obligation of another person

4.2.3 Section 70 - Non-Gratuitous Acts

• Person who lawfully does anything for another or delivers anything to another, not intending to do so gratuitously, is entitled to compensation
• Other person enjoys benefit of such act or thing
• Act must be lawful and non-gratuitous
• Recipient must have enjoyed benefit

4.2.4 Section 71 - Responsibility of Finder of Goods

• Finder of goods has no right to sue owner for compensation for trouble and expense voluntarily incurred
• May retain goods against everyone except true owner until compensation for preservation received
• May sell goods in certain circumstances: (a) when thing is in danger of perishing or losing value, or (b) when lawful charges amount to two-thirds of its value
• Finder must give reasonable notice to owner before sale

4.2.5 Section 72 - Money Paid by Mistake or Under Coercion

• Person to whom money has been paid by mistake or under coercion must repay or return it
• Applies to money paid under mistake of fact, not mistake of law (subject to exceptions)
• Recipient must make restitution even if he has changed his position
• Basis is unjust enrichment

4.3 Quantum Meruit

• Means "as much as earned" or "in proportion to work done"
• Claim for reasonable remuneration for work done or services rendered
• Arises when contract is discharged by breach, when contract is void, when party abandons contract after partial performance, when work completed but quantum of remuneration not specified