BL 3 Performance of a Contract.pptx

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Business Law

TAHIR ADEEL

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Contract Act 1872

Performance of the Contract

• Important Issues

• Who has to perform the contract

• Joint Promises

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Performance means:

That the parties fulfil, accomplish or perform their

respective obligations.

In simples words, performance means to do

whatever is promised.

Promisor:

The person who promises to perform a certain

obligation.

Promisee:

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Performance obligation:

The parties to a contract must perform or offer to

perform, their respective promises.

Promises bind the representatives of the promisor

in case of death of promisor.

◦ For example: Babar promises to deliver goods to Amjad on a certain day on payment of Rs. 200,000/-. Babar dies before that day. Babar’s representatives are bond to deliver the goods to Amjad, and Amjad is bound to pay Rs. 200,000/- to Babar’s representatives.

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Refusal to accept performance:

When a promisor has made an offer of

performance to the promisee, and the offer has

not been accepted, the promisor is not liable for

non-performance.

◦ For Example: Shakir sold 50 bags of wheat to Bilal and promised to deliver these on March 24, 2015. On 24th march Shakir

brought him the bags but Bilal did not accepted without any justified reason. Shakir is not responsible for non-performance.

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Refusal of party to perform promise

fully/wholly:

When a party to a contract refused to perform, or

disabled himself for performing his promise

wholly, the promisee may put an end to the

contract.

◦ For example: A tailor enters into a contract with Basit to sew 5 shirts each day for next two days and promised to pay Rs. 3,000 per day. The second day the tailor did not sew the cloth wilfully. Basit is at liberty to put an end to the contract.

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The Promisor:

If the intention of the contract was that the

promisor will perform the promise by himself,

then it should be performed by promisor himself.

◦ For example:

Hamza promises to paint a picture for Ali,  Atif aslam (a singer) promises to sing,

Faisal Qureshi (an actor) promises to act etc.

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Acceptance of performance by third party:

When the promisee accepts the performance from

third party.

◦ For example: a carrier of goods promising the consignor to be liable for loss of his goods during transit can ask the insurance company to take over the liability for loss of said goods in

transit.

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Devolution of Joint Liabilities:

In case a promisor dies, the legal representative

of the person shall be liable to perform the

promise.

In case of death of any jointly liable person, his

representative shall fulfil the promise.

◦ For example:

A & B promises C to sale 10 bags of sugar Rs. 30,000, before the execution of contract A dies. The legal heir of the person A will fulfil the promise along with B.

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Can promisee compel any of the joint

promisor to perform?

When two or more persons make a joint promise,

the promisee may compel any one or more of

such joint promisors to perform the whole of the

promise.

◦ For example: B & C jointly promise to pay Z Rs. 5000 rupees. Z may compel either B or C to pay him Rs. 5000 rupees.

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Joint Promisor may compel other to

contribute in Performance:

If one or more of the joint promisors are

compelled to perform the promise, he or they

compel every other joint promisor to contribute

equally in the performance.

◦ For example: B & C jointly promise to pay 5000 rupees to Z. Z compelled B to pay whole of the debt. B may compel C to

contribute 2500 rupees.

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Loss Sharing:

If any one of two or more joint promisors makes

default in a joint promise, the remaining joint

promisors must bear the loss arising from such

default in equal shares.

◦ For example: B & C jointly promise to pay 5000 rupees to Z. Before the performance B defaults, in such case C will have to pay the whole amount to Z.

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Release of one Joint Promisor:

Where two or more persons have made a joint

promise and one of the joint promisors is released

by the promise. It does not discharge the other

joint promisor or joint promisors.

◦ For example: A & B being partners, promises C to sale 10 bags of sugar Rs. 30,000, A left the sugar business before the

execution of contract. Now B is responsible to fulfil the promise.

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When no time for performance is specified:

When no time for performance is specified, the

obligation must be performed within a reasonable

time.

The reasonable time varies with case to case.

◦ For example: A and B enters into an agreement to sell A’s car for Rs. 800,000. B has paid the amount. Now A is liable to

transfer the possession of car to B within reasonable time.

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Where time for performance is specified:

When time is mentioned in the contract then

performance can be done at any time within the

due date but in usual business hours.

◦ For example: Shakir sold 50 bags of wheat to Bilal and promised to deliver these on March 24, 2015. On 24th march Shakir

brought him the bags after the closing time of shop. Bilal is not bound to receive the bags. Shakir has not performed his

promise.

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Application for Performance:

When the performance of the promise is subject

to the application of the promisee to perform, it is

the duty of the promisee to apply for performance

at a proper place and within the usual hours of

business.

◦ For example: A and B enters into an agreement to sell A’s car for Rs. 800,000 to B. B has paid the amount and delivery of the car is subject to application of B. Now A will only deliver the car after receipt of the such notice from B and B is liable to notify A within the usual hours of business.

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When no place for performance is fixed:

When no place is fixed for performance of

contract. It is the duty of the promisor to apply to

the promisee to appoint a reasonable place for

the performance.

◦ For example: A undertakes to deliver 5 computers to B on a certain day. A must apply to B to appoint a reasonable place to deliver the computers.

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Performance in manner or at Time

prescribed:

The performance of any promise may be made in

any manner or at any time which the promisee

prescribes or sanctions.

◦ For example: A and B enters into an agreement to sale A’s bike for Rs. 30000. B may ask to deliver the bike at his home at

11am on November 10th.

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Discharge of a Contract

Figure

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References

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