1. Actual Performance: This means complete performance of the contractual obligation, no further duties to discharge under the agreement. This constitutes full and actual performance of promise.

2. Attempted Performance (Tender): The promisor intends to perform his obligation, but the promisee prevents him at the time when the performance is due.

An offer to perform is also called Tender. There are two types of tender:

- Tender of Goods and Services: When the goods or services are tendered in accordance with the terms of contract their delivery amounts to discharge of obligation under the contract. If they are not accepted by the promisee, the offeror is bound to retake the goods or services and is discharged from liability.

- Tender of Money: Where the debtor tenders money to the creditor but the latter refuses, then the debt continues unpaid. Hence, making a tender for money alone does not discharge the debtor from repaying his debt.

Put differently, while tender of goods and services discharges contractual obligations on acceptance or rejection, tender of money does not discharge a debt until such time when payment is accepted by the obligee.

Tender of Performance

Sections 37 to 39 of the Indian Contract Act, 1872 relate to the CHAPTER 3 PERFORMANCE OF CONTRACTs by parties entering into the same. Section 37 of the Act requires that the parties of a contract undertake to perform or tender performance of the promises made in a contract. Section 2(b) of the Act defines a promise under a contract as an acceptance by the offeree from the offeror of a proposal.

Hence, every party is duly obligated to perform their respective obligations by the terms of the contract, except where the contract expressly exempts or relieves one from performing such obligation.

The performance of a promise in a contract made after death binds the representatives of the dead parties; provided that the contract itself does not otherwise specify. For example, there is a contract between 'A' and 'B', in which 'A' has agreed to supply goods to 'B' after receiving a certain sum by a given date, and before fulfilling his promise, 'A' dies. Now, the legal representatives of 'A' will be bound by the promise of 'A' to supply the goods, while 'B' will still be liable to pay the agreed amount for the goods to the representatives of 'A'.

But promises connected with the personal skill or artistry of any person do not bind his legal representatives. Therefore, if 'A' promises 'B' to paint a portrait by a particular date for a certain price and before doing so 'A' dies, neither is 'A's representative bound by the promise nor can 'B' compel 'A's representatives to specifically perform 'A's promise.

The Obligation of Parties to Perform

Contractual obligations refer to the legally bound duties between contract parties. Parties usually exchange legally bound items within a contract, which can be goods, services, money, or other miscellaneous things. As an example, one party has to deliver the automobile while the other pays for it in the contract of sale of an automobile. These obligations, the terms governing them—payment method, amount, time, and location of delivery—are all part of the contract.

In the case of M. Kamalakannnan v. M. Manikanndan 8143 Mad, there was a contract between the plaintiff and the defendant for the sale of property. The plaintiff withheld part of the agreed payment to compel the defendant to fulfill obligations such as evicting tenants from the property and delivering it vacant. On his part, the defendant contended that the partial non-payment by the plaintiff was a breach of the terms of the contract.

In Geo-Group Communications INC v. IOL Broadband Ltd 364 SC, the parties signed an agreement and performed it fully, rendering further execution of the agreement unnecessary. The agreement had been categorically referred to as a preliminary draft and for discussion only. In subsequent legal challenge, the Court did uphold the validity of the agreement, thus affording the claimant relief.

Tender Submission Amounts to Offer

Where a tender is submitted in response to an invitation, it represents an offer to contract and does not in itself represent the contract. In , M/S Great Eastern Energy vs M/S Jain Irrigation Systems Ltd, the tender provided for it to be valid for four months. After that period, acceptance would not be validly made. The court, therefore, considered appropriate the forfeiture of the security deposit by acceptance of the tender after its validity period had lapsed and the subsequent failure of performance on the part of the tenderer.

Binding Effect of Promises on Representatives

Subject to the proviso to Section 37, in case of the promisor's death, their legal representatives continue to be liable for the obligation arising from the promises made by them, unless the contract expressly otherwise provides. It was laid down in Basanti Bai vs Sri Prafulla Kumar Routrai 101 (2006) CLT 685 Bench, that when a person dies leaving no legal representative behind, the liability to perform the promise made by that person flows to the person who derives an interest in the subject matter of the contract from such deceased person. However, the Cuttack High Court held that the plaintiff in the case at hand was unable to prove her allegations of a prior agreement and hence could not enjoy the benefit under this principle.

Renewal Clause

A renewal clause in an agreement envisages an extension or re-commencement of terms originally agreed to.

It was held in the case of Hardesh Ores Pvt. Ltd vs M/S. Hede Appeal (civil) 2517 of 2007, and Company that the contract had a renewal clause, which one party, at its absolute discretion enshrined in the terms of the contract, renewed, and the other party refused to acknowledge the renewed contractual terms. The Supreme Court has held in such scenarios that the party empowered by the contract with the power to renew its terms must seek judicial declaration and enforcement for the renewal before a court of law.

Exception

Section 37 s of The Indian Contract Act, 1872 sets out conditions in which CHAPTER 3 PERFORMANCE OF CONTRACT be may be excused or may be dispensed with, other than Section 35 and 38, which is on actual performance and tender respectively. The following exceptions given below clarify this exemption:

1. Acceptance of Performance by Promisee: Change in the mode of performance agreed between the promise and the promisee from the stipulations which has been made by the promisor, the promisor may be discharged from his obligation in the term of contract.

Example:

In Nikka Mal Babu Lal v. Nand Kishore, the Madras High Court held that where the promisee accepts goods or services of something other than that promised under the contract, without any complaint, it would be a September that is dispensed with under Section 37.

Novation: An existing contract is discharged by the substitution of a new agreement entered by the parties.

Example :

Ramtirth v. State of Rajasthan: According to the Supreme Court of India, novation is held by the common law of India to effect the discharge of the original duties under Section 37 when the parties enter into a new contract replacing an old one.

3. Remission: Consenting to a payment that is less than that originally stipulated discharges the rights to the corresponding extent.

- Illustration:

Acceptance by the promisee of money in satisfaction of the whole debt was held to be remission under Section 37 of the Indian Contract Act, 1872, in Cheshire County Council v. Paul by the House of Lords.

4. Waiver: when the promisee at his option dispenses with or abandons any right arising from his contract or permits the promisor to deliver defective performance without the promisee insisting otherwise, the promisor is excused by such conduct of the promisee from returning any performance which he has rendered under the contract

Lakshmiji Sugar Mills Co. Ltd. v. Gauri Dutt, where the Bombay High Court held that the granting of the promisee's waiver by a promisor in one occasion does bring along with it an estoppel against enforcing the strictness in performance in future unless such waiver is perpetual.

Case Law

- Nikka Mal Babu Lal v. Nand Kishore:

The Madras High Court held that "the mere fact that the appellant received possession without any protest did not amount to a waiver of his right to strict performance. And even though time was not of essence in the contract, the appellant was entitled to rescind the contract and refuse.

- Ramtirth v. State of Rajasthan:

The Supreme Court observed that agreeing to transfer altered the terms and conditions of employment worked as novation, releasing the promisor from Section 37.

Tender of Performance

The concept of tender of performance demands that the offeror must present performance regarding an obligation under the contract to the offeree. This act represents the "tender of performance," and it is at the discretion of the latter to accept or refuse the offer. Subsequently, in case the offeree refuses to accept the offer with the offered performance, the offeror does not incur any liability for non-performance of the terms of such contract; neither does the offeror lose their rights under the contract. It is well settled that failure to accept a tender of performance excuses the promisor from any further obligation to perform under the contract, and the promisor is free to sue the other party for non-performance.

Section 38 of the Contract Act lays down that a tender of performance is considered performance in itself. Every tender of performance must fulfill certain basic requirements:

1. Offer be without any condition. The offer should be unconditional. This has been laid down under Section 38(1).

2. Offer should be made at a proper time and place. That is, a reasonable opportunity must be provided to the offeree to ascertain the ability of the offeror to contract. This has been provided under Section 38(2).

3. Where the offer is to furnish goods to the offeree, the offeror shall afford the offeree reasonable opportunity to compare the goods offered with those contracted for under Sect 38(3).

Requirements for a Valid Tender under Section 38

1. Offer to Perform: The tender must be a real offer of the promisor to perform their obligation under the contract.

2. Performance at Proper Time and Place: The tender must be made at the proper time and place specified in the contract or agreed upon by the parties.

3. Reasonable Opportunity: A reasonable opportunity to inspect the performance and to determine whether he will be accepting it or not, must be given to the promisee.

Reasonable Opportunity: This brings in an element of equity in as much as the promisee is in a position to check whether what is being tendered actually conforms to the requirements of the contract. The Supreme Court judgement in the case of *Shiva Jute Baling Ltd. v. Hindley & Co.* insists that there should be a reasonable opportunity to inspect practically.

Absolute and Unconditional Offer: During the formation of the contract, the offer made there must be strict compliance with the terms settled in the contract, and no new conditions can be introduced. In *Bhagwandas Goverdhandas Kedia v. M/s. Girdharilal Parshottamdas*, an attempt to impose a new term which the Plaintiff there was not bound to accept, vitiated the tender.

Case Laws:

Shiva Jute Baling Ltd. v. Hindley & Co. (AIR 1959)

Emphasized giving real chance of scrutiny to the promisee.

Bhagwandas Goverdhandas Kedia v. M/s. Girdharilal Parshottamdas:

It was held that a proper tender is never itself a proposal, it therefore shall completely keep to the original terms without adding any new conditions.

Unconditional Nature of Tender of Performance

Under Sect 38(1) of the Act, the tender of performance must be unconditional. It shall not be accompanied by any clauses, provisions, or conditions whether precedent or subsequent. The judgment in the case of Haji Abdul Rehman explained that a tender becomes conditional on departure from originally agreed terms of the contract. This principle therefore ensures that parties cannot be compelled to accept modified terms that were not originally agreed on. For instance, if party A extends an offer to party B to pay them an amount of money only if B will sell certain goods, then such a conditional tender is invalid. Also, in the case of A sending a single check for two items, one of which was due immediately and the other payable later, the court held that it was proper for the promisee to refuse the check as the check could not be partially accepted.

Timeliness and Location of Tender

For example, Section 38(2) of the Act provides that a tender of performance must be made at a reasonable place and time, and in such circumstances that give the offeree a reasonable opportunity to inspect whether the offeror is capable or obligated to perform the whole of what is contemplated by the contract.

It was pointed in P.L.S.A.R.S., Sabapathi Chetty Vs. Krishna Aiyar AIR 1936 MADRAS 225 that time and place are usually agreed upon by the parties. Performance within the preconditioned terms absolves the promisor from further obligations.

In the case of Startup v. Macdonald (1918) 87 L.JKB 677, the defendant had purchased ten tons of linseed oil with delivery required within the last fourteen days of March. The plaintiff tendered the goods on the fourteenth day but the defendant refused claiming late delivery. The court held that the defendant was liable for breach of terms of the contract as the tender was made before midnight thus meeting the contractual requirement.

In Afovos shipping co. v. R Pagnan (1983) UKHL J0127-1, there was an international contract which provided that consideration in the form of payment had to reach the defendant before the 14th day of the month with consideration. Before that day came, the defendant repudiated. The court held that the defendant should have waited until after the 14th day of the month to repudiate.

Moreover, the goods tendered should strictly conform to the description in the tender under Section 38(3) of this Act. Any discrepancy invalidates the tender.

CHAPTER 3 PERFORMANCE OF CONTRACT – By Whom Contracts Must Be Performed

Section 40 of the Indian Contract Act lays down the rules relating to CHAPTER 3 PERFORMANCE OF CONTRACTs. It means that the 'promise' if expressed by the contract to be performed personally by the promisor, he cannot delegate any other person to perform such act on his behalf. Contrary to this, if the contract does not provide for the same, any competent person in the absence of promisor can perform a promise on his behalf. For instance, A may promise to pay B a sum of money. He himself may perform it or may authorize some other person to perform it. If A dies without having appointed an agent, the legal representative of A must either perform the promise or appoint some other person for performance.

Personal Vs. Impersonal Analysis

1. Personal Promises:

A promise for which no reasonable person would expect to have to rely on anything other than the personal qualifications, skill, or characteristics of the promisor. The performance of such a promise cannot be made another because the promise rests on personal ability and performance.

Examples:

-Entertainment or sports contracts that require a specific performer whose performance ability is the basis of the engagement.

- Professional service contracts (medical, legal, consultancy) where performance depends on the personal skill of the individual.

2. Impersonal Promises:

An impersonal promise can be performed by any qualified individual and does not call for the personal qualities or characteristics of the promisor.

-Examples:

- Supply of goods or services contracts where the identity of the provider praising the items is more important than the items per se.

- Construction contracts where strict adherence with the terms as per the owner's necessarily is more important than who the contractor is.

- Personal Promises: Section 40 states that promises which are based upon the personal skill, quality or aptitude of the promisor do not bind the legal representatives on the inability or death of the promisor. Thus, such legal representatives as heirs or executors are not liable to meet such promises.

- Impersonal Promises: It bind the original promisor, and in case of the death or other incapacities, not even the recipients who derive the benefit from the promise will be able to compel or demand that the legal representatives of the promisor either perform the contract or make payments in absence of performance.

Courts determine whether the promise is personal or impersonal in nature; this usually is done to identify the extent of the obligations on the legal representatives. In the case of contracts involving personal skills, the nature of what is promised should be spelled out in order to avoid uncertainty and enforceability.

Effect of Third Party's Performance

Section 41 of the Contract Act deals with acceptance by promisee of performance at the hands of third party. The provision therein is that if the promisee accepts performance of a promise from any third person, he shall not afterward enforce the contract against the promisor.

if the contract from its very commencement expressly provides that the promise is to be performed by the promisor himself, such an intention excludes enforcement of the promise against the legal representatives of the promisor after their death. This fact usually occurs in such contracts as require the personal skill or characteristic of the promisor.

Under Section 37 of the Act, it is well-established that the promise of a deceased promisor during his lifetime binds his legal representatives. Thus, unless the contract provides otherwise, the representatives of a deceased promisor are bound by and can enforce all the promises made by the deceased.

In Kapur Chand Godha vs Mir Nawab Himayatalikhan Azamjah 1963 AIR 250 1963 SCR (2) 168, the court has pointed out the wide difference existing between English and Indian Law on the point of performance of promises by the representatives of the deceased promisors. While under English law, it is acknowledged that for a contract to bind the representatives of parties in the event of death, there must be a clear intention of the parties, under Indian law, Section 41 of the Indian Contract Act expressly provides that when the promisee accepts performance from the third party, he cannot afterwards enforce the promise against the promisor.

Joint Promises

Section 42 in the Act deals with the joint promises and when two or more promisors jointly make a promise. They, in totality, become known as co-promisors. Thus the provision is: that the joint promisors shall be jointly liable to perform the promise, provided that it is expressed otherwise in the contract. In case of death of any one of them, his legal representative remains liable for the liabilities that the promisor was bound to during his lifetime.

Discharge of Joint Promises

Under English law, on the death of one of several joint promisors, the surviving promisors become entitled and liable to perform the promise instead of the deceased promisor, till the last of joint promisors is alive. The rule is regarded as somewhat injurious to creditors because they have no right to know about the solvency of remaining promisors. Section 42 of the Indian Contract Act fills up this lacuna in the rule.

Devolution of Joint Liabilities

Section 42 of the Indian Contract Act deals with devolution of joint liabilities. It lays down that where two or more persons have made a joint promise to execute a contract, they must execute it jointly during their lives. On the death of any joint promisor, his legal representatives, jointly with surviving promisors, are liable to fulfill the promise. Upon the death of the last surviving promisor, the legal representatives of all deceased promisors become jointly liable for fulfilling the promise. However, this liability is subject to any private arrangements made between the parties to the contract.

Under Section 42, this provision ensures that the promisee is provided security in that the promisors are bound to the promise by their hand running their lifetime and carried forward through their legal representatives even after death.

In Gannmani Anasuya & Ors vs Parvatini Amarendra Chowdhary Appeal (civil) 7318 of 2000, the Court reiterated that Section 42 imposes an obligation as far as possible, to fulfill the promise on the legal representative of the promisor who is deceased, unless it is expressly or impliedly excluded by the contract.

Section 41 of the Indian Contract Act provides that the proposal can be accepted by a third party to whom it is communicated regardless of the fact that acceptance was not intended by the original proposer.

Case Law:

Lalman Shukla v. Gauri Dutt (1913)

A servant, Lachman Shukla, was sent by his employer in search of the employer's nephew, who the employer had sent to a neighbouring village. The said nephew had died before the servant could find him. Not aware of the said death, when the servant came back not having found the said nephew, he was told by some persons that said nephew had died.

This leading case has often been cited with regard to illustrating principles related to acceptance by a third party under Section 41 of the Indian Contract Act, 1872. From it comes the legal principle that a proposal may be accepted by a third party to whom it is communicated, irrespective of the intentions of the original proposer to the contrary.

Joint and Several Liability

Section 43(1) of the Indian Contract Act deals with joint promises, where two or more persons make a promiscuous promise. Anything-signatory may enforce whole promise against any one of joint promisors unless a contract is expressed to the contrary.

Compulsion for Contribution

Section 43(2) of the Act provides that every promisor may, in the case of a joint promise compel the others to contribute equally to the performance of the promise, unless the contract is otherwise .

Division of Loss on Default

Under Section 43(3), in case of deficiency in contribution coming from any of the joint promisors to the promise, the rest shall jointly bear the loss and compensate the other party in equal shares.

The explanation added to s 43 clearly states that nothing in that section shall prevent a surety from recovering money paid on behalf of the principal, nor shall the principal be enabled to recover anything from the surety for payments made by the surety on behalf of the principal.

Discharge of One Joint Promisor

Section 43 of the Indian Contract Act, 1872 deals with one of the most important concepts of a joint and several liability, governing the contractual obligations of multiple promisors. Joint and several liability signifies the relationship when several promisors are jointly bound to render the whole performance under a contract, and at the same time, each is individually liable for the same obligation. This form of dual liability gives the creditor the power to enforce his right against one or more promisors, taken alone or jointly, for the whole amount due.

Contribution and Division of Losses:

-Concept of Contribution:

Among Joint Promisors: On the execution of the obligation by a creditor against one promisor, such promisor shall still have a right of contribution against the other joint promisors, in proportion to the share each of them may have in the obligation.

-Loss Sharing:

It is presumed that the performance of the promise in a joint promise shall be borne equally by all the joint promisors unless the contract provides otherwise or such intention can be inferred from the course of dealings or from necessary implication. When one promisor dies, or is unable to perform his share or does not perform adequately, the others may be compelled to make good the deficiency.

Case Law

Bank of Bihar Ltd. v. Damodar Prasad & Sons (AIR 1969 Pat 149):

The court held that joint and several liability does not detract from the creditor's freedom to demand the whole from any one or more of the promisors. The promisor who pays may then seek contribution from others.

Raj Rani v. Prem Adib (AIR 1948 Lah 97):

The court followed the principle that in the case of joint and several liability, every promisor is bound singly for the whole debt so that the creditor may ask every one of them individually to pay the full amount of the debt.

Section 44 of the Indian Contract Act provides for what is called the Right to Release, by virtue of which the former can release any one of the joint promisors from liability. The purport of this provision is that where liability of one of the joint promisors is released by the creditor, the rest are not discharged from their obligations to complete the promise made jointly. The discharge of a promisor from his liability to the promisee does not discharge him from his liability in regard to other joint promisors.

Section 44 of the Indian Contract Act thus differs from common law, which denotes that discharge of one promisor ordinarily discharges all promisors from liability to the promisee unless the promisee has reserved his right against the other promisor.

In Indian contract law, more precisely under Section 44 of the Indian Contract Act, 1872, "Right to Release" means discharging one joint promisor from his obligation in a contract.

How the Right to Release Works:

-Persons who have jointly entered into an undertaking to pay, deliveries or performance of a contract and each of them is collectively liable for the whole.

-Under Section 44, when a creditor discharges one joint promisor wholly or partially without obtaining consent from all the other joint promisors, then the promisor so discharged is discharged from liability.

-Discharge of one joint promisor will not operate to discharge the others automatically from their liability. The remaining joint promisors are fully liable unless there is an express agreement or circumstance to release them.

Impact on Obligations of Other Joint Promisors:

- Continued Liability: Unless the contract or release expressly so provides otherwise, the liability of the other joint promisors persists for the entire obligation.

- Proportional Liability: Where there is a partial release and the liability of one of the joint promisors is discharged to some extent, the remaining joint promisors are still liable for their proportionate share of the obligation.

- Necessity of Consent: As a general proposition, the discharge of one joint promisor requires the consent of all the other joint promisors. If such release is made without their consent, the other promisors are not discharged from their liability.

Exceptions:

- If the discharge forms a novation agreement changing the original contract terms, all parties to this new agreement must agree to such changes.

- If one of the joint promisors is a guarantor for the rest, his release may affect the others' liability depending on the nature of the guarantee.

The right to release allows creditors to deal independently with the liability of individual promisors so long as the release meets statutory and contractual requirements. Courts enforce releases that meet legal requirements, for example, those made with full authority and consideration.