1. Actual Performance: This means complete performance of the contractual obligation, thus op citrus 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 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.

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).

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 Haji Mahomed 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.

Performance of Contract – By Whom Contracts Must Be Performed

Section 40 of the Indian Contract Act lays down the rules relating to 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.

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.

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 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.