breach of contract

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Performance &Breach of Contract

Course facilitator – Ms. Shilpi Gupta

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3.16 Performance of Contracts

3.17.1 Meaning of Performance

Performance of contract means fulfilling of the terms of the contract by the respective parties to the contract. The Act lays down "The parties to a contract must either perform, or offer to perform, their respective promises, unless performance is dispensed with or excused under the provisions of this Act, or of any other law". 67 It means that the performance may be either actual - by fulfilling all obligations by the parties under the contract or attempted where an offer to perform one's obligations has been made by the promise, but the performance is not complete unless the offer of performance is accepted by the promise. Such offer to perform one's obligation under a contract is called tender. The second part of the definition lays down that the parties are excused from performance under the provisions of this Act or any other law. For example, an insolvent is excused from performing his part of the contract by law.

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Promises bind the legal representatives of .the promisors in case of death of such promisors before performance, unless a contrary intention appears from the contract. The liability of the legal representative is limited to the extent of the value of the property inherited from the deceased.

Illustrations

A promises to deliver goods to B on a certain day on payment of Rs. 1,000.

A dies before that day. A's representatives are bound to deliver the goods to Band B is bound to pay Rs. 1,000 to A's representatives.

A promises to paint a picture for B by a certain day, at a certain price. A dies before the day. The contract cannot be enforced either by A's representatives or by B.

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3.16.2 Who can demand performance

It is only the promisee who can demand performance of the promise. The general rule is that "a person cannot acquire rights under a contract to which he is not a party. "68

3.16.3 Who should perform the promise?

a. In case of personal contract by the promisor personally.

b. In case of non-personal contract: i. By the promisor personally.

ii. By a third person on behalf of the promisor.

iii. In the event of the death of promisor - by his legal representatives.

c) In case of Joint promisor - by the promisors jointly or third person on behalf of the promisors or their legal representatives.

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Breach of Contract

Meaning of Breach of Contract

A breach of contract occurs if any party refuses or fails to perform his part of the contract or by his act makes it impossible to perform his obligation under the contract. In case of breach, the aggrieved party (i.e., the party not at fault) is relieved from performing his obligation and gets a right to proceed against the party at fault. As stated earlier [paragraph 3.18.2(f)] a breach of contract may either be anticipatory or actual.


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Remedies of Breach of Contract

A remedy is the courses of action which are available to an aggrieved party for the enforcement of a right under a contract. The various remedies available are:

Rescission of Contract": Rescission means a right not to perform obligations.

In case of breach of a contract, the promisee may put an end to the contract. In such a case, the aggrieved party is discharged from all the obligations under the contract and is entitled to claim compensation for the damage which he has sustained because of the non-performance of the contract.

Suit for Damages: Damages are monetary compensation allowed for loss suffered by the aggrieved party due to breach of contract. Damages may be of five kinds:


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I. Ordinary or general or compensatory damages: (i.e., damages arising naturally from the breach).

II. ii. Special damages: (i.e., damages in contemplation of the parties at the time of contract).

III. iii. Exemplary, Punitive or Vindictive damages: (i.e., damages which are in the nature 'of punishment).

IV. iv. Nominal damages: (i.e., awarded only for the namesake).

V. Liquidated damages: Means a sum fixed up in advance, which is a fair and genuine pre-estimate of the probable loss that is likely to result from the breach. _

c) Suit for Specific Performance: Means demanding the court's direction to the defaulting party to carry out the promise according to the terms of the contract. For example: X agreed to sell an old painting to Y for Rs. 50000. Subsequently X refused to sell the painting. Here, Y may file a suit against X for the specific performance of the contract.


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d) Suit for Injunction: Means demanding court's stay order Injunction means an order of the court which prohibits a person to do a particular act. For example: W agreed to sing at L's theatre only during the contract period. During the contract period, W made contract with Z to sing at another theatre and refused to perform the contract with L. It was held that W could be restrained by injunction from singing for Z.

e) Suit for Quantum meruit: Quantum-meruit means as much as is earned. In this suit, claim is made to compensate for the work already done. For. example: C an owner of a magazine engaged P to write a book to be published by instalments in his magazine. After a few instaulments were published, the publication of the magazine was stopped. It was held that P could claim payment for the part already published.


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breach of contract

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