Performance Of Contracts - 1 Flashcards
What is the meaning of performance?
Performance means fulfilling the promise under the contract.
What are the two types of performance?
Following are the two types of performance:
1: Actual performance
2: Attempted performance.
What is Actual Performance?
If a promisor actually performs the promise, and promisee accepts it.
What is Attempted Performance?
If a promisor offer to perform the promise in accordance with the terms of the contract, but promisee doesn’t accept it.
Attempted Performance is also called a valid tender.
What is the effect of refusal to accept performance?
If tender of goods or services is refused:
• Contract becomes voidable at the option of promisor. If he rescinds the contract, he is discharged from his liability i.e. he is not liable to deliver goods or services again.
• Promisor can claim damages as compensation.
If tender of money is refused:
• Promisor is not discharged from his liability i.e. he is still liable to pay money.
• However, promisor is not liable to pay the interest for delay in payment.
What are the essentials of a valid tender?
Following are the essentials of Valid tender:
1: Unconditional
2: At proper Time
3: At proper place
4: To proper person
5: According to terms and conditions
6: Reasonable opportunity to inspect
7: For whole obligation
8: Of exact amount and in legal tender.
What is the meaning of Appropriation of Payment?
Appropriation of Payment means making allocation of current payment between previous debts.
What are the rules of Appropriation of Payment?
Rules of Appropriation of Payment:
1: If debtor intimates (whether express or implied) whic6debys to settle, payment must be applied to discharge those debts.
2: If debtor doesn’t intimate about which debt to settle, creditor can adjust any previous debt.
3: If no party makes appropriation, previous debts shall be adjusted in order of time.
° If debts occured on same day, they shall be adjusted proportionately.
° If principal and markup both are due, then markup is settled first.
In rule 2 and 3, time barred debt can also be adjusted but disputed debt can’t be adjusted.
Write modes of discharge of a contract or liabilities of parties?
Following are the modes of discharge of a contract or liabilities of parties:
1: Discharge by performance.
2: Discharge by mutual agreement (i.e. Novation, Alteration, Rescission, Remission and waiver)
3: Discharge by impossibility of performance (i.e. initial possiblity or supervening impossibility)
Define Novation?
Novation means parties agree to substitute a new contract in place of old contract. Parties to the contract may also change.
After Novation, parties can’t demand the performance of old contract.
What is meant by alteration?
Alteration means a material change in the terms of a contract, with mutual consent of the parties.
Parties to the contract remain same.
What is Rescission?
If both parties agree to cancel the contract by mutual consent before the date of performance (without substitution of new contract), it is called Rescission by mutual agreement.
What is remission?
Remission means acceptance of lesser consideration in place of original promise (e.g accepting a lesser amount of debt or extending time for performance of contract)
What is meant by waiver ?
Waiver means a person surrenders his legal rights under the contract. Thus, other party is released from his obligation.
What is the effect of promisee’s neglect in the contract?
If promisee doesn’t give promisor reasonable facilities for the performance of contract, promisor is discharged from his liability by such neglect/refusal.
