This document discusses the obligation of parties to perform contracts under Indian law. It explains that parties must perform their contractual promises unless performance is excused. In the event of one party refusing to perform, the other party has options to end the contract or keep it open and seek damages later. It also discusses exceptions for contracts involving personal skills, as well as the concept of anticipatory breach where a party signals before performance is due that they will not fulfill their obligation. The measuring of damages depends on whether the contract was terminated or kept open following an anticipatory breach.

1. Performance of Contracts
(Section 37-67)

2. Performance of Contract
 Obligation of Parties/Refusal to accept/ Refusal to perform contract : Section 37 - 39
 By whom Contracts must be performed : Section 40-45
 Time, Place and Manner of Performance : Section 46 -50 & section 55
 Performance of Reciprocal Promises : Section 2, Section 51-54 & 57
 Performance of Alternative Promises : Section 58
 Rules as to Appropriation of Payments : Section 59-61
 Modes of Discharge of Contracts : Section37-39, 56, 62-64 & 67

3. Obligation of Parties to perform contract : Section 37
The Parties to a contract must either perform, or offer to perform, their respective
promise, unless such performance is dispensed with or excused under provisions of this
Act, or of any other law.
Promises bind the representatives of the promisors in case of death of such promisors
before performance, unless a contrary intention appears from the Contract.
Illustration: A promises to deliver goods to B on a certain day on payment of Rs 1000. A
dies before that day. A’s representatives are bound to deliver the goods to B, and B is
bound to Pay Rs 1000 to A’s representatives.
Exception to above rule: When a personal skill and qualities are involved in the
performance of Contract, the contractual relations are put to an end by death of
promisor.

4. Obligation of Parties to perform contract : Section 37
Exception to above rule: When a personal skill and qualities are involved in the
performance of Contract, the contractual relations are put to an end by death of
promisor.
Illustration: A promises to paint picture for B by a certain Day, at a certain place. A dies
before that day. The Contract cannot be enforced either by A’s representatives or by B.

5. Can a Third Party Demand Performance of a Contract ?
If yes provide examples if No why Not?

6. Obligation of Parties to perform contract : Section 37
General Rule of Contracts: A person cannot acquire rights under a Contract to which he is
not a party. A stranger to a contract cannot sue upon the contract.
Exception being: when a Contract between A and B is intended to secure a benefit to C, as
a beneficiary, C can sue in his own right to enforce the trust.
Where there has been assignment of rights under a contract in favour of third person by
(i) Act of a Parties or (ii) by Operation Of law.
Assignment by Operation of Law: Usually through purchase or lease of interest in land, or
by death or bankruptcy
Assignment by act of Parties: The burden or liability of a contract cannot be assigned
without the consent of the other party to a contract. So also there can be no assignment
of even the benefits under a contract, if there are obligations involving personal
qualifications.

7. Effect of Refusal to accept offer of performance: Section 38
Where a Promisor has made an offer of performance to the promise, and the offer has not
been accepted, the promisor is not responsible for non performance, nor does he thereby lose
his rights under the contract.
Every such offer must satisfy the following conditions:
(1) It must be unconditional
(2) It must be made at a proper time and place, and under such circumstances that the person
to whom it is made may have a reasonable opportunity of ascertaining that the person by
whom it is made is able and willing there and then to do the whole of what he is bound by
his promise to do
Illustration:
A Contracts to deliver to B in his construction site 100 MT of Steel on 1st June 2016. In order
to make an offer of performance A must bring the Steel to B’s construction site, on the
appointed day, under such circumstances that B May have a reasonable opportunity of
satisfying himself that the thing offered is 100Mt of steel of the Contracted quality.
Note: This section deals with Tender of performance. A Contract is totally discharged if goods
are tendered by seller according to contract. If buyer refuses to accept them, they need not
be offered again, and seller is discharged. He can bring an action for non-performance or
defend an action for non-delivery.

8. Effect of Refusal of a party to perform promise wholly :
Section 39
When a Party to a contract has refused to perform, or disabled himself from performing, his
promise in its entirety, the promise may put an end to the contract unless he has signified, by
words or conduct his acquiescence in its continuance.
Illustration Scenario 1: A, a singer, enters in to a contract with B, the manager of a theatre, to
sing at his theatre two nights in every week during the next two months, and B engages to pay
her 10000 Rupees for each night’s performance. On the sixth night A wilfully absents herself
from the theatre. B is at liberty to put an end to the contract.
Illustration scenario 2: A, a singer, enters in to a contract with B, the manager of a theatre, to
sing at his theatre two nights in every week during the next two months, and B engages to pay
her 10000 Rupees for each night’s performance. On the sixth night A wilfully absents herself.
With the assent of B, A sings on the seventh night. B has signified his acquiescence in
continuation of contract, and cannot now put an end to it, but is entitled to compensation for
damage sustained by him through a’s failure to sing on the 6th night.

9. Effect of Refusal of a party to perform promise wholly
(Anticipatory breach of Contract): Section 39
Anticipatory Breach of Contract is its breach or repudiation before the time fixed for its
performance.
Where a party to a contract refuses to perform its part of the contract before the actual
time arrives, the law gives the promisee an option whereby he may either
(i) Elect to rescind and may then treat the contract as at an end, and at once sue for
damages or
(ii) Elect not to rescind, but to treat the contract as still operative, and wait for time of
performance, and then hold the other party responsible for consequence of non
performance. But, if he elects to take this course, the contract still remains operative for
the benefit of both parties, and the party who has previously repudiated may, not
withstanding his repudiation, still perform it, if he wants to.
The measurement of damages in case of an anticipatory breach of contract depends whether
is repudiated or kept open by the other party. If the contract is treated as repudiated, the
damages will be measured by difference between contract price and market price on date of
breach. If, however, the contract is kept open, the damages will be determined by the
difference between contract price and the market price prevailing on the date fixed for
performance of the contract. However, If in the interval between repudiation and due date of
performance, some event happens which enables the repudiating party himself to avoid the
contract, he is entitled to do so, not withstanding his prior act of repudiation.

10. Effect of Refusal of a party to perform promise wholly
(Anticipatory breach of Contract): Section 39
Anticipatory Breach of Contract is its breach or repudiation before the time fixed for its
performance.
Anticipatory Breach may take place in two ways:
1. Anticipatory breach by repudiation
Illustration: Case of Frost V Knight. The defendant promised to marry the plaintiff
as soon as the defendant’s father died. However, even during his father’s lifetime, the
defendant refused to marry the Plaintiff. Although the time for performance had not arrived,
the plaintiff was held entitled to sue for breach of promise to marry.
2. By impossibility of performance brought about by the act of one of the parties.
Illustration: A person contracts to sell a specific white Race horse to another on a
particular day, and if, before that date, he sells it to somebody else, the other party can at
once bring a suit for rescission and damages.
However, If in the interval between repudiation and due date of performance, some event
happens which enables the repudiating party himself to avoid the contract, he is entitled to do
so, not withstanding his prior act of repudiation.

11. Effect of Refusal of a party to perform promise wholly
(Anticipatory breach of Contract): Section 39
Anticipatory Breach of Contract is its breach or repudiation before the time fixed for its
performance.
If the party (Party facing the anticipatory breach), elect not to rescind, but to treat the
contract as still operative, and wait for time of performance, and then hold the other party
responsible for consequence of non performance. But, if he elects to take this course, the
contract still remains operative for the benefit of both parties.
However, If in the interval between repudiation and due date of performance, some event
happens which enables the repudiating party himself to avoid the contract, he is entitled to do
so, not withstanding his prior act of repudiation.
Illustration: Thus, if A agrees on 1st January to sell a horse to B on 2nd February, and if he
informs B on 15th January that he will not sell his horse at all, B can at once sue A for damages
caused by Anticipatory Breach of Contract. But if he disregards the repudiation and waits till
2nd February, and if before that date, the horse dies, B cannot recover any damages from A;
for contract comes to an end by death of the horse, and A can take advantage of this fact.