Law and You > Business Laws > Indian Contract Act, 1872 > By whom Contracts must be Performed (Ss. 40 to 45 of the Indian Contract Act)
A contract places a legal obligation upon the contracting parties to perform their mutual promises, and it carries on until the discharge or termination of the contract. The most natural and usual mode of discharging a contract is to perform it. A person who performs a contract in accordance with its terms is discharged from any further obligations. As a rule, such performance entitles him to receive the other party’s performance. Exact and complete performance by both the parties puts an end to the contract. In expecting exact performance, the courts mean that, performance must match contractual obligations. In this article, let us discuss by whom contracts must be performed.
In requiring a contract to be complete, the law is merely saying that any work undertaken must be carried out to the end of the obligations. A contract should be performed at the time specified and at the place agreed upon. When this has been accomplished, the parties are discharged automatically and the contract is discharged eventually. In certain cases attempted performance may also operate as a substitute for actual performance, and can result in complete discharge of the contract.
Person by whom Promise is to be Performed (S. 40 ICA)
According to Section 40 of the Indian Contract Act, 1872 if it appears from the nature of the case that it was the intention of the parties to any contract that any promise contained in it should be performed by the promisor himself, such promise must be performed by the promisor. In other cases, the promisor or his representatives may employ a competent person to perform it.
- By Promisor: If from the nature of the contract it appears that it was the intention of the parties that the promise should be performed by the promisor himself, such promise must be performed by the promisor. This usually applies to contracts involving personal skill, taste or art work. For example, A promises to paint a picture for B. As this promise involves personal skill of A, it must be performed by A.
- By Agent: Where the contract does not involve personal skill of the promisor, the contract could be performed by the promisor himself or by any competent person employed by him for the purpose, For example, A promises to pay B a sum of money. A may perform this promise, either by personally paying the money to B or by causing it to be paid to B by another ; and, if A dies before the time appointed for payment, his representatives must perform the promise, or employ some proper person to do so.
- Legal Representatives: The contracts which do not involve any personal skill or taste, may be performed by his legal representative after the death of the promisor.
In Basanti Bai v. Sri Prafulla Kumar Routrai (2006) case, the Orissa High Court held that if there is no legal representative then, in that case, the liability to perform the promise on his behalf would fall upon the person who acquires interest over the subject matters of the contract through that deceased party.
Effect of Accepting Performance from Third Person (S. 41 ICA):
According to Section 41 of the Indian Contract Act, 1872 when a promisee accepts performance of the promise from a third person, he cannot afterwards enforce it against the promisor.
In some cases, a contract may be performed by a third person provided the promisee accepts the arrangement. According to Section 41, once the promisee accepts the performance from a third person, he cannot compel the promisor to perform the contract again.
Joint Liability of Performance of Contract (S. 42 to 45 ICA)
Devolution of Joint Liabilities (S. 42 ICA):
According to Section 42 of the Indian Contract Act, 1872 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 the last survivor, the representatives of all jointly, must fulfil the promise.
For example, A, B and C jointly promise to pay Rs. 3,000 to D. A dies. B and C along with A’s legal representative are jointly and severally liable to pay the amount to D. This rule is called ‘devolution of joint liabilities’. It is however, subject to the condition that no other intention appears from the contract. In other words, if a contrary intention appears from the contract then the rule given above shall not apply.
Any One of Joint Promisors may be compelled to Perform (S. 43)
According to Section 43 of the Indian Contract Act, 1872 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.
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.
In case the joint promisors do not perform their promise jointly, then Section 43 comes into operation.
Illustrations:
(a) A, B and C jointly promise to pay D 3,000 rupees. D may compel either A or B or C to pay him 3,000 rupees.
(b) A, B and C jointly promise to pay D the sum of 3,000 rupees. C is compelled to pay the whole. A is insolvent, but his assets are sufficient to pay one-half of his debts. C is entitled to receive 500 rupees from A’s estate, and 1,250 rupees from B.
(c) A, B and C are under a joint promise to pay D 3,000 rupees. C is unable to pay anything, and A is compelled to pay the whole. A is entitled to receive 1,500 rupees from B.
(d) A, B and C are under a joint promise to pay D 3,000 rupees, A and B being only sureties for C. C fails to pay. A and B are compelled to pay the whole sum. They are entitled to recover it from C.
Effect of Release of One Joint Promisor (S. 44)
According to Section 44 of the Indian Contract Act, 1872 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 joint promisors.
When a promisee releases one of the joint promisors it does not discharge the other joint promisor or promisors. This means that the remaining joint promisors continue to be liable to pay the amount. The released joint promisor remains liable to contribute to the other joint promisors.
Devolution of Joint Rights (S.45)
According to Section 44 of the Indian Contract Act, 1872 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.
For example, A, in consideration of 5,000 rupees, lent to him by B and C, promises B and C jointly to repay them that sum with interest on a day specified. B dies. The right to claim performance rests with B’s representative jointly with C during C’s life, and after the death of C with the representatives of B and C jointly.
Conclusion:
The provisions regarding who must perform contracts under the Indian Contract Act, 1872, are fundamental to ensuring that contractual obligations are met efficiently and legally. According to the Act, contracts must generally be performed by the parties who have entered into the agreement, unless otherwise specified. This principle emphasizes the importance of personal responsibility and accountability in contractual relationships. The Act recognizes exceptions, such as situations where performance can be delegated to third parties, provided that the nature of the contract allows for such delegation. However, the original parties remain liable for the fulfilment of the contract, ensuring that obligations are ultimately met. This duality of responsibility fosters trust and reliability in business dealings.
In conclusion, the provisions related to who must perform contracts under the Indian Contract Act, 1872, establish a clear framework that promotes accountability, fairness, and legal certainty. By delineating the responsibilities of contracting parties, the Act helps to ensure that obligations are honoured and disputes are minimized, thus contributing to a stable and trustworthy commercial environment in India.