Business law & leg environ lecture 6


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Performance of contract

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Business law & leg environ lecture 6

  1. 1. BUSINESS LAW & LEGAL ENVIRON Lecture 6 (March/12) Presenter; ISMATULLAH BUTT Ph.D. (S)
  2. 2. Performance of Contract2 Performance of Contracts:  It means fulfilling of their legal obligations created under the contract by the promisor and the promisee.  Performance by all the parties of the respective obligations is the normal and natural mode of discharging or terminating a contract. W can demand Performance of a Contract? ho  A person cannot acquire rights under a contract to which he is not a party.  A third party cannot demand performance of the contract even if it was made for his benefit.  If the promisee dies, his legal heirs are entitled to enforce the performance of the contract against the promisor.
  3. 3. Performance of Contract3 W are Bound to Perform Contracts: ho  By the Promisor himself.  By the Promisor or his Agent.  By the Legal representatives.  Performance by a third person.
  4. 4. Performance of Contract4 Performance by the Promisor himself:  If it appears from the nature of the case that it was the intention of the parties to any contract that any contract contained in it should be performed by the promisor himself, such promise must be performed by the promisor. (Sec, 40)  Contracts involving personal skill, taste or credit fall in this category. Painting a picture. By the Promisor or his Agent:  In the case of a contract of impersonal nature, the promisor himself or his agent may perform the contract. [Sec. 40 (20)]  Contract of sale of goods or contract to lend money.
  5. 5. Performance of Contract5 By the Legal representatives:  In case of the death of the promisor before performance, the liability of performance falls on the legal representatives, unless a contrary intention appears from the contract. [Sec. 37 (2)]  A personal cause of action comes to an end with the death of the person concerned.  In the case of contracts not involving personal considerations, the legal representatives are bond to perform the contract.  Painting a picture- not enforceable.  Sale of goods- enforceable.
  6. 6. Performance of Contract6 Performance by a Third Person:  If a promisee accepts performance of the promise from a third person, he cannot afterwards enforce it against the promisor. ( Sec. 41 )  Performance by a stranger, once accepted by the promisee, discharges the promisor.  This is true although the promisor has neither authorized nor ratified the act of the third party. Performance of Joint Promises: Joint promises may take any of the following shapes; i. Several joint promisors make a promise with a single promisee. ii. A single promisor makes a promise with several joint promisees. iii. Several joint promisors make a promise with several joint promisees.
  7. 7. Performance of Contract7 W can demand performance of Joint Promises? ho  When a promise is made to several persons jointly, then, unless a contrary intention appears from the contract, only all the promisees can claim performance jointly.  If any of the promisees dies, his legal representatives can jointly demand performance with the surviving promisees.  If all the promisees are dead, their legal representatives can jointly demand performance of the contract.  So long as all the joint promisees are alive, all of them can jointly demand performance of the contract and on death of any promisee, his legal representatives step into his shoes.
  8. 8. Performance of Contract8 By whom Joint Promises must be performed? (1) All Promisors must jointly fulfill the promise: (Sec. 42)  When two or more persons have made a joint promise, then, unless a contrary intention appears from he contract, all such persons must jointly fulfill the promise.  When any of the joint promisors dies, his legal representatives must, jointly with the surviving promisors fulfill the promise.  On the death of all the original promisors, the legal representatives of all of them must jointly fulfill the promise.  The above rule is subject to the following: a) Contracts involving personal skill, come to an end on the death of any of the joint promisors. b) Liability of the legal heirs is limited to the assets inherited by them.
  9. 9. Performance of Contract9 (2) Any one of joint promisors may be compelled to perform. [Sec 43 (1)]  Liability of joint promisors is “joint and several”, as against the promisee.  Any one or more of the joint promisors can be compelled to perform the whole promise, in the absence of agreement to the contrary. (3) Right of contribution inter-se between joint promisors. [Sec 43 (2)] If one of several joint promisors perform the whole contract, he may require equal contribution from the other joint promisors, unless contary intention appears from the contract. (4)Sharing of loss by default in contribution. (5) Effect of release of one joint promisors. (Sec 44)  If one of the joint promisors is released from his liability by the promisee, this does not discharge the other joint promisors from
  10. 10. Contract Act10 Assignment of Contracts:  Assignment means transfer of contractual rights and liabilities to a third party, with or without the concurrence of the other party to the contract.  An assignee can bring an action on his own initiative, against the other party to the contract.  Contracts involving personal skill cannot be assigned.  The obligations under a contract cannot be assigned except with the consent of the promisee.  The rights and benefits under a contract are assignable unless the contract is of personal nature or the rights are incapable of assignment either under the law or under an agreement between parties.  Assignment by law takes place in cases of death and insolvency.
  11. 11. Contract Act11 Novation:  Novation occurs when a new contract is substituted for an existing contract, either between the same parties or between different parties, the consideration mutually being the discharge of the old contract. (Sec. 62 )  It thus includes two cases; 1. A new contract between the same parties in place of the old one. 2. A new party is introduced and the old contract is varied by the liability hereunder being transferred to or being taken over by the new party.  Novation cannot be compulsory, it can only be with mutual consent of all parties.  The new contract must be valid and enforceable.