Corporate & Business law

Assignment # 4

Submitted to:Sir Amir Faheem Submitted by:-

Muhammad Arslan Arshad ID # 110845-015

Program:M.com (2nd semester) Batch 8th

(IAA)

Topic:Performance of contract & who can demand, who must perfom

Date:24-12-2011

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Corporate & Business law

TOPIC:Explain Performance of contract under single and joint performance, who can demand? Who must perform?

Performance of Contract
Performance of Contract means the fulfillment of legal obligations created under the contract by both the promisor and promisee. When a contract is duly performed by both the parties, the contract comes to an end. The rules regarding the performance of contracts are as under: Promisor = who has some obligations Promisee = who has some rights, authority PERFORMANCE OF SINGLE PROMISE A single promise is that promise in which there is one promisor and one promise. Who can demand performance? 1. Only promisee can demand. 2. In case of his death, legal representatives. 3. In some exceptions, 3rd party. We can demand Performance In single promise the rules to demand performance are as under: 1. Promisee It is only the promisee who can demand performance of the contract. A person cannot acquire rights under a contract to which he is not a party. A third party cannot demand. Performance of the contract even though it wasmade for his benefit. . EXAMPLE A promises B to pay Rs. 500 to C. If A does not pay to C, only B can demand performance. C cannot demand performance from A.

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2. Legal representative In case of death of the promisee, his legal representatives can demand performance of a contract unless a contrary intention appears form the contract or the contract is of a personal nature. EXAMPLES a. A boughtrice from B. B died before recovery of price. Legal representatives of B can demand performance. b. X promises to marry v'on a specified day. Y dies before that day. The representatives of Y cannot demand performance of promise from X. 3. ThirdParty A third party can also demand the performance of contract in someexceptional cases. EXAMPLE A transfers some property to B under trust for the benefit of M. M can demand the performance of contract from B. Who can perform? 1. 2. 3. 4. Promisor only. His agent, if no personal skills are involved. In case of his death, legal representatives. When a person accepts performance of the promise from a third person.

Who must performs A contract must be performed as under: 1. The Promisor himself A contract must be performed by the promisor himself. 'In case of contract involving personal skill or taste, the promisor himself must perform the contract. In case of death or disablement of a promisor, a contract will discharge.

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EXAMPLE A promises to paint a picture for B. A must perform the promise himself. 2. The Agent In a contract where no personal skill is involved, the promisor may employ a competent person to perform it. In a contract to sell goods, the promisor can appoint an agent to perform the contract. EXAMPLE A promises to sell goods to B. A can ask his agent for performance. 3. The Legal Representatives If the promisor dies before performance, his legal representatives become liable to perform the contract. In a contract involving personal skill, the legal representatives ofadeceased promisor are not bound to perform the contract. But in a contract of impersonal nature, the legal representatives are bound to perform the contract. They are liable to the extent of the estate of the deceased received by them. They are not personally liable. EXAMPLES a.A promises to deliver goods to B on a 1stMay 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. b.A promises to paint a picture for B before a certain day. A dies before that day. It cannot be enforced against the representatives of A. 4.The Third Person When a promisee accepts performance of the promise from a third person, he cannot afterwards enforce it against the promisor.

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EXAMPLE A borrows Hs. 2 Lac from B and promises to repay within a month. C, the father of A pays Rs. 2 Lac to B. A is discharged from his liability.

PERFORMANCE OF JOINT PROMISES

Two or more persons may enter into a joint agreement with one or more persons. In such cases, questions arise regarding demand for performance and performance of contract. Following are the rules regarding performance: Who can Demand Performance The rules for demand of performance are as under: 1. Promisees When a promise is made with several persons jointly, then in the absence of any agreement to the contrary, all the promisees jointly can demand performance and a single promisee cannot demand performance. EXAMPLE A borrows Rs. 2 Lac from 8 and C. Only 8 and C can demand the performance jointly. 2. Legal representatives In case of death of any promisee, the legal representatives of deceased person jointly with surviving promisees can demand performance. When all promisees are dead, the legal representatives of all jointly can demand performance.

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EXAMPLE A borrows Rs. 5 Lac from b and C. If b dies, B's representative and C jointly can demand performance. If C dies, C's representatives and b jointly can demand performance. Who Must Perform The rules regarding performance to contract are as under: 1. All Promisors must jointly fulfill the Promise When two or more persons make a joint promise, then, unless a contrary intention appears from the contract, all such persons must jointly fulfill the promise. When anyone of the joint promisors dies, his legal representatives must fulfill the promise, jointly with the surviving promisors. On the death of all the original promisors, the legal representatives of all of them jointly must fulfill the promise. EXAMPLE A, B& C jointly promise to pay Rs. 3,000 to D. A, B& C must contribute Rs. 1,000 each and pay Rs. 3,000 to D. If A dies then the representatives of A are liable to pay Rs. 1,000 along with B& C. 2. Anyone of joint Promisors may be compelled to Perform Though the joint promisors are required to perform the promise jointly but, the promisee may compel anyone of the joint promisors to perform the promise. In case of death of original debtor, the promisee must bring the suit against all the heirs of the debtors. EXAMPLE A, Band Cjointly promise to pay of, Rs. 3000.May compel either A or B or C or any two or all of them to pay.

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3. Each Promisor may compel for Contribution If one of the joint promisors is compelled to perform the whole contract, he can ask for equal contribution to the others unless a contrary intention appears from the contract. EXAMPLE A, Band C jointly promise to pay of, Rs. 3000. If A is compelled to pay the entire amount of Rs. 3000, he can recover Rs. 1000 each from Band C. 4. Sharing of loss by Default in Contribution If anyone of the joint promisors makes a default in making contribution, if any, the remaining joint promisors must bear the loss arising out of such default in equal shares. EXAMPLE A, Band C are under a joint promise to pay D, Rs. 3000.If C is unable to pay anything and A is compelled to pay the whole. A is entitled to receive Rs. 1500 from B. 5. Effect of Release of one joint Promisor In case of a joint promise, if one of the joint promisors is released from his liability by the promisee, his liability to the promisee ceases but his liability to the other promisors to contribute does not cease: EXAMPLE A, Band C are under a joint promise to pay Rs. 3000 to X. X releases C from liability. A and B remain liable to pay to X. C is not released from the liability to A and B. If X recovers from A and B, then they can recover from C.

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Assignment of Contract
Assignment means transfer. Assignment of contract means transfer of contractual rights and liabilities to a third party. It may occur by; (i) (ii) The act of parties or The operation of law

1. Assignments by Act of parties It issubject to the following rules a. Contractual liabilities This is subject to the following rules: i. Contract involving personal skill or qualification cannot be' assigned e.g. painting of a picture by a painter. Thus, it is the. State where one party cannot delegate the act of performance-to another. A promisor cannot assign his liabilities. Under a contract. In other words a promisee cannot be compelled to' accept a third person to perform the promise, e.g. A owes Rs. 100 to Band B owes the same amount to C. B cannot ask C to recover from A.

ii.

b. Contractual rights This is subject to the following rules: i. ii. The rights and benefits cannot be assigned if they are of personal nature. An actionable claim can be assigned only by an instrument in writing. Notice of such assignment must also be given to the debtor.

2.Assignment by Operation of Law This may take place in anyof the following circumstances:
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a. Death Upon the death of a party to the contract, his rights and liabilities are assigned to his heirs. But when the personal skill is involved the contractual relations come to an end on the death of promisor. . b. Insolvency In case of a party to the contract being declared insolvent, his rights and liabilities under the contract are assigned to the official receiver or assignee as the case may be. Reciprocal Promise Promises which form the consideration for each other' are called reciprocal promises. In other words, a contract consists of reciprocal promises when one party makes a promise in consideration ofa similar promise made by the other party.

Rules of performance
Rules of performance of reciprocal promises are: 1. Mutual and Concurrent Where the two promises are to be performed simultaneously, they are called mutual and concurrent. In case of such promise, the promisor need not perform his promise unless the promisee is ready to perform his reciprocal promise. A & B contract that A shall deliver goods to B at a price to be paid by B on delivery. A need not deliver the goods unless B is ready to pay on delivery and B need not pay unless A is ready to deliver them on payment. 2. Mutual and Independent Where one party has to perform his promise independently without waiting for the performance by other party, they are called mutual and independent. Such promises must be performed in the order fixed by the
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contract, and where the order is not expressly fixed, they must be performed in that order which the nature of the transaction requires. EXAMPLE A agreed to build a house for B at a fixed price; A's promise to build the house must be performed before B's promise to pay for it. 3. Prevention of Performance When a contract contains reciprocal promises and one party to the contract prevents the other from performing his promise, the contract becomes voidable at the option of the party so prevented; and he is entitled to compensation from the other party for any loss whichhe may sustain in consequence of the non-performance of the contract. EXAMPLE A and B contract that B shall execute certain work for A for Rs. 1000. B is ready to do the work but A prevents him from doing so. The contract becomes voidable at the option of B. 4. Conditional and Dependent When the performance of the promise by one party depends on the prior performance of the promise by the other party, the promises are conditional and dependent If the promisor, who is required to perform his promise in the first place, fails to perform it, such promisor cannot claim the performance of the reciprocal promise and must make compensation to the other party for any loss which such other party may sustain by the non-performance of the contract. EXAMPLE A promises to sell 100 bales of cotton to B, to be delivered next day. B promises A to pay within a month. A does not deliver. B's promise to pay need not be performed and A must make compensation.
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5. Legal and Illegal reciprocal promises Where persons reciprocally promise, firstly to do certain things which are legal and secondly under specified circumstances to do certain other things which are illegal, the first set of promises is a contract but the second is void agreement. EXAMPLE A agrees to sell a house to 8 for Rs. 100,000. If 8 uses it as a gambling house, he shall pay A Rs. 500,000. The first promise is a contract and the second promise is a void agreement. 6. Alternative promises being illegal In case of an alternative promise, one part of which is legal and other illegal, the legal part alone can be enforced. EXAMPLE A & B agrees that a shell B RS.1 lac for which B shall deliver to either rice or opium. It is a valid contract to deliver rice and illegal agreement as to opium.

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