Types of Performance of Contract
Performance of contract means that both the promisor and the promisee have fulfilled their respective obligations under the contract. Contracts require the contracting parties to perform their mutual promises until they are discharged or terminated. A contract is discharged most naturally and usually by performing it. When a contract is performed as agreed, the parties are discharged from further responsibility. He is generally entitled to receive the performance of the other party if he performs such a task. For Example, X visits a bakery shop in order to purchase a cake. X pays the shopkeeper for delivering the cake. As a result of mutual performance, the contract is discharged.
Some of the Major Types of Performance of Contract are as follows:
A) Actual Performance
This type of performance occurs when all parties to the contract fulfill their contractual obligations. No party remains liable for further performance after the respective promises of the parties have been fulfilled, and each party is released from any further obligations. In this way, the contractual relationship will be discharged in a more expected and happy way and the parties will end their relationship in the best possible way.
A contract between A and B states that A will sell a computer to B for Rs. 25,000. Upon delivery of the computer by A, and payment of Rs. 25,000 by B, the contract is discharged.On payment of Rs. 50,000, X promises to deliver Y a certain quantity of goods on a certain date. It is mandatory that X’s legal representatives deliver the goods to N if he dies before delivery. In that case, Y is required to pay Rs. 50,000 to the representatives if X dies before delivery.
Therefore, actual performance must be accurate and complete. Also called a specific performance, it does not modify the methods of performance in any way. Whenever the terms of the agreement are modified, another counterparty becomes the aggrieved party and has the right to claim legal recourse.
B) Attempted performance or Tender of Performance
An attempted performance occurs when one party offers to perform his obligations under the contract but the other party does not accept the offer. Tender is an offer by one party to perform his part of the promise. The performance of the contract is equivalent to a tender of performance. As a consequence, the promisor is excused from performing further and he is not deprived of his rights under the contract. Therefore, he has the right to claim damages.The promisor is not responsible for non-performance of his obligations when the promisee does not accept the offer, nor does he lose his rights in the contract as a result.
The contract between K and L specifies that 1000 tons of Onion will be delivered to L’s warehouse on 8th May 2019. K delivers the goods to L during business hours on the due date, but L refuses to accept them without providing a good reason. In the given situation, K has fulfilled his contractual duty of performing what he was obliged to do. In K’s case, the performance was considered an attempted performance, which is considered equal to performance. He does not need to perform again, and his contractual rights are not affected. Whether actual or attempted performance is required depends on the nature and type of contract.
Types of Actual Performance
- Substantial Performance
- Partial Performance
Types of Tenders of Performance / Attempted Performance
There are two Types of Tenders of Performance or Attempted Performance;
- Tender of Goods/services
- Tender of Money
a) Tender of Goods/Services
Tender of goods/services is when the promiser offers to deliver goods and services, but the promisee does not accept them. The seller is discharged from liability when the buyer refuses to accept the goods despite the seller satisfying all requirements of a valid delivery. The following consequences result from a tender of goods or services:
- There is no need to offer them again.
- The promisor becomes entitled to sue the promisee for breach and
- It removes the promiser’s liability.
b) Tender of Money
Tender of money occurs if the promisor offers to pay money but the promisee does not accept it. The circumstances are as follows:
- There is still a liability on the part of the promisor to pay the money.
- After a valid tender has been submitted, the promisor will not be responsible for the interest.
Essentials Requirements of valid Tender/Requisites of Valid Tender
For a tender to be valid, it must meet the following conditions:
a) Unconditional: The tender must be unconditional in order to be valid. Conditional tenders are not good tenders, and they can be refused by the party. A conditional tender is a contract that is performed with some changes by the promisor of the contract to the terms agreed upon. As an example, if X has to pay Rs. 50,00 to Y, but now X has added some conditions, then the tender becomes conditional and invalid.
b) Timely completion is essential: A proper time should be set for the tender. Contractual times should be followed accordingly, and if not, then it should not be within business hours. It is not valid to tender goods after business hours or to pay money before the due date.
c) At proper place: Tenders should be submitted at the appropriate location. In case the place of performance is not specified in the contract, then an appropriate place should be selected by the promisor. If no such place is specified, then the tender should follow the same procedure.
d) Reasonable opportunity: Any tender that provides delivery of anything must give the promisee a reasonable opportunity to examine that which has been offered as the thing promised. It is not valid for the tender if the promiser does not provide this reasonable opportunity.
e) Whole obligation: Rather than only tendering part of an obligation, it is necessary to tender the entire obligation. The validity of the tender may not be affected by minor deviations from the contract.
f) Proper person: Promising a contract must be made to the promisee’s authorized agent or to the promisee himself. It is not valid to make a tender to an unauthorized person.
g) Promises made together: The tender can be made to anyone not mentioned in the contract if there are several joint promisees.
h) Proper form and manner: It is important to perform the contract or tender in the proper manner. Current coins should be used in the tender of money. It is not mandatory for someone to accept a check, but a tender by check is valid if the person accepting it is willing to do so.
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