Performance of contracts under Indian Contract Act 1872 refers to the execution of obligations arising from a valid agreement between parties.
## Core concept
Performance is the actual carrying out of the obligations undertaken by parties to a contract. It discharges (ends) the contract and is the most common mode of discharge under Section 37–40 of the Indian Contract Act, 1872.
Key distinction: Performance differs from *offer to perform* (tender). A tender is a valid offer to perform; if refused wrongfully, the refusing party remains liable.
Two types of performance: - Actual performance: Complete execution of all contractual obligations - Tender (offer to perform): A bona fide attempt to perform; sufficient to discharge the promisor if wrongfully rejected by the promisee
## Rules governing performance (Sections 37–40)
- Time of performance (Section 37): If no time is stipulated, the promisor must perform within a reasonable time
- Place of performance (Section 37): If no place is fixed, performance must occur at the place where the contract was made
- Order of mutual performance (Section 38): When both parties have reciprocal obligations with no fixed order, either party may demand performance by the other first (unless the contract indicates otherwise)
- Performance by third party (Section 40): Unless the contract specifies personal performance, a third party may perform on behalf of the promisor, *unless* personal skill or credit is essential
- Effect of wrongful refusal (Section 39): If the promisee wrongfully refuses or prevents performance, the promisor is discharged and may recover compensation
## Common exam applications
Scenario 1: A contracts with B to paint B's house by 31 March. A completes the work on 2 April without any specified delay clause. Can B refuse payment?
*Answer:* B cannot completely refuse payment. A has performed, though tardily. B may claim damages for delay under Section 73, but the contract is discharged.
Scenario 2: A owes B ₹10,000. A tenders the exact amount at B's house, but B refuses. Can A be sued?
*Answer:* No. A's tender is valid performance. The refusal discharges A's liability. A is not in breach.
Scenario 3: C contracts with D for D to render accounts (requiring D's personal expertise). Can D send a subordinate?
*Answer:* No. Accounts require personal skill. D must perform personally unless the contract permits delegation (Section 40).
## Common mistakes
- Confusing tender with performance: A tender that is wrongfully refused discharges the promisor's obligation; it is *not* non-performance
- Assuming time is always essential: Unless the contract expressly states "time is of the essence," delay in performance may only entitle compensation, not termination
- Forgetting place of performance rules: Students often overlook that performance at the correct place (or a reasonable place if unstated) is mandatory
- Misunderstanding third-party performance: Performance by a third party is allowed for non-personal contracts; the promisor remains liable to the promisee even if a third party executes the work
- Ignoring reciprocal obligations: Under Section 38, when parties have mutual obligations without a fixed sequence, neither can demand performance first; both must perform together (unless one act must logically precede the other)
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Key takeaway for exam: Performance discharges a contract. Tender (valid offer to perform) also discharges if wrongfully refused. Know the rules on time, place, and order of performance; distinguish personal from impersonal contracts.