Business Law
TAHIR ADEEL
Contract Act 1872
•
Performance of the Contract
• Important Issues
• Who has to perform the contract
• Joint Promises
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:
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
