Types of Performance of Contract

Types of performance of the contract.

(For the meaning of the term looks the answer of the previous question) 

The performance of the contract may be of two types. So, on the basis of nature of the contract, the performance of the contract can be categorized as below;

    a. Actual Performance

It is that type of performance where each party of the contract fulfills their contractual obligations under the contract. After fulfillment of respective promises of the parties, no party remains liable for further performance and each party is completely discharged from the obligations created by the contract. 

This is the most expected and beneficial mode of discharge of the contractual relationship and will lead to the happiest ending of the contractual relationship between its parties.

For example, C and D enter into a contract that C will sell a computer to D for Rs. 25,000. When C delivers the computer and D pays Rs. 25,000 to C the contract is discharged by the performance.

Similarly, M promises to deliver a certain quantity of goods to N on a certain date on payment of Rs. 50,000. If M dies before the delivery then the legal representatives of M are bound to deliver the goods to N and N will be bound to make payment of Rs. 50,000 to the representatives.

Thus, actual performance must be exact and complete. It is also known as a specific performance where there is no sort of modification in the methods of performance. 

If there is any modification from the agreed terms then another the counterparty will become the aggrieved party and can claim for legal remedies.

   b. Attempted performance or tender of performance

When an offer is made by one party to perform his obligation under the contract but the other party does not accept the performance, it is known as attempted performance.

The offer of performance by a party of his part of the promise is called tender. Thus, a tender of performance is equivalent to the performance of the contract. In such a case it excuses the promisor from further performance and he does not lose his rights under the contract. i.e. he is entitled to claim damages. 

Thus, ‘Where a promisor has made an offer of performance to the promisee 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.

For example, S enters into a contract with R to deliver 100 tons of potato at his warehouse on 5^th May 2020. 'S' takes the goods to R's place on the due date during business hours, but R, without conveying any good reason, refuses to take the delivery. 

In the given situation S has performed his duty created by the contract of has performed what he was obligatory to perform under the contract. The performance performed by S is called attempted performance and is considered equal to performance and he does not need to perform again and also not lose any contractual rights. 

The nature and type of contract determine whether the performance should be actual or attempted.

The tender of performance or attempted performance is also divided into two types;

1.   Tender of goods/services

2.   Tender of Goods/Services

       

 1. Tender of goods/services

If the promiser offers to deliver goods and services, but the promisee does not accept such delivery then it is called tender of goods/services. 

In a contract of sale of goods, when the seller satisfies all requirements of a valid delivery and the buyer refuses to accept the goods, the seller is discharged by such tender or performance. 

Therefore, the tender of goods or services has the following consequences:

• They need not be offered again.
• The promisor becomes entitled to sue the promisee for breach and
• The promiser gets rid of his liability.

        

2. Tender of Money

If the promisor offers to pay money but the promisee does not accept, then it is said to be tender of money. It has the following circumstances:

• The promisor does not get rid of his liability to pay money and
• The promisor will not responsible for the interest from the date of a valid tender.

Essentials of valid tender/Requisites of valid tender

Every tender should follow the following conditions to be valid tender:

• Unconditional

Any tender to be a valid tender must be unconditional. It a tender is conditional; it is not a good tender and the party can refuse it. Here the conditional tender means the performance of the contract with some alteration in the agreed terms by the promisor of the contract.

For example, if A has to pay Rs. 50,00 to B and now A has put some conditions to pay the sum of money then it becomes conditional tender and is invalid.

• Should be done at the proper time

The tender should be done at a proper time. If the time is fixed in the contract then it should follow accordingly and otherwise within business hours inappropriate time. A tender of goods after the business hours or money paid before the due date is not a valid tender.

• At proper place

The tender should be made at the proper place. If the place is fixed in the contract then tender should follow the same procedure and in case of no mention of the place of performance than an appropriate place should be selected by the promisor to perform the delivery of goods and services.

• Reasonable opportunity

If the tender is to give delivery of anything then reasonable opportunity must be given to the promisee to examine that thing offered is the thing which was promised. In the case of the promiser does not provide such reasonable opportunity then the tender is not valid. 

• Whole obligation

Tender must be made concerning the whole obligation and not only of the part. However, a minor deviation from the terms of the contract may not affect the validity of the tender.

• Proper person

The tender must be made to the proper person i.e. the promisee or his authorized agent. The tender made to unauthorized persons is not valid.

• Joint promises

If there are several joint promisees, a tender can be made to anyone otherwise not mentioned in the contract.

• Proper form and manner

The performance of the contract or tender should be performed in a proper form. The tender of money should be made as to the current coins. A person is not compelled to accept a cheque but tender by cheque is valid when the person to whom it is tendered is willing to accept such payment.

References

Mishra B.P. (2006), Mercantile Law, Kathmandu: Asia Books Distributers

Upreti Shreepraksh. (2018), Business Law, Kathmandu: Samjhana Publication Pvt Ltd

Panday Yugraj. (2019), Business Law, Kathmandu: Asmita Books Publisher & Distributors Pvt Ltd

Kalika S.N. (2013), The Law of Contract, Kathmandu: Prithivi Prakashan