Post Graduate Programme in Management –

Part Time (PGPM - PT)

1

LEGAL ASPECTS OF BUSINESS

(LAB)

Prof. Parul Gupta

PhD (Faculty of Law-JMI, New Delhi), LL.M., PGDBM

Dr. Parul Gupta

 SESSION 6
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 Performance of Contract
 Discharge of Contract &
 Remedies for the Breach of Contract

REMINDER
QUIZ TEST TWO – SESSION 4 & 6

Dr. Parul Gupta

 Performance of Contract
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Fulfillment of the legal obligation in a contract is

called performance of the contract
Section 37
The parties to a contract must either perform or
offer to perform their respective promises, unless
such performance is dispensed with or excused
under the provision of the Indian Contract Act, or
any other law.
 In case of death of the promisor
 the representatives of the promisor are bound to
perform the promise unless a contrary intention
appears from the contract.
Dr. Parul Gupta
 Performance of Contract
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Offer of Performance
 X promised to deliver some 90 bales of cotton to Y .
X offered the delivery only when Y is ready to
accept 10 more bales of cotton along-with 90 bales.
 X contracts to deliver to Y at his warehouse, on 1st
November, 2017, 100 bales of cotton of a particular
quality.
 X contracts with Y & Z ( joint promisees) to deliver
synthetic cotton made in China at their shop. X
brings the contracted synthetic cotton of agreed
quantity to their shop when Y was present in the
shop but Z was out for some work.
Dr. Parul Gupta
 Performance of Contract
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 Offer of performance (Section 38)

 Must be unconditional and

 Must be made at a proper time and place

 Under such circumstances that the person to

whom it is made may have a reasonable
opportunity for inspection
 Offer made to one of several joint promisees has
the same effect as an offer to all of them.

 Who can demand performance

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 Performance of Contract
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Effect of refusal of party to perform

wholly (Section 39)

P, a singer, enters into a contract with Q, the

manager of a theatre, to sing at his theatre
two nights in every week during next two
months, and Q engages to pay her 100
rupees for each night’s performance. On the
sixth night P willfully absents herself from
the theatre.
Dr. Parul Gupta
 Performance of Contract
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A THIRD PARTY CAN NOT DEMAND

PERFORMANCE EVEN IF IT WAS FOR
HIS BENEFIT
1. By the promisor himself (Section 40 (1) )
2. By the promisor or his agent
3. By the legal representative (Section 37)
4. Performance by a third party (Section 40
(2) )
 Effect of accepting performance from
third person
Dr. Parul Gupta
 Time an Essence-Performance of
Contract
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Case7.1: Bhagwands Metals Ltd. V M/s.

Raghvendra AAgencies

Discussion Point
 Was time the essence of the contract
 Was the buyer entitled to claim the
damages for the delayed
performance(delivery of the machinery)
Take Away
Dr. Parul Gupta
 Performance of Contract
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 Contracts which need not be performed (Sec

62 to 67)

1. Termination by agreement
2. Remission by promise
3. Voidable contracts
4. Refusal to accept the performance

Dr. Parul Gupta

 Discharge of Contract
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Discharge of contract means termination of

the contractual relationship between the
parties to the contract.

Modes of Discharge

1. By Performance
(i) Actual performance
(ii) Attempted performance

Dr. Parul Gupta

 Discharge of Contracts
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2. By Mutual Consent
X is indebted to Y and Y to Z. By mutual
agreement Y’s debt to Z and Y’s loan to X are
cancelled and Z accepts X as his debtor. –
Novation

P contracted to deliver a rolling machine to Q at

Rs. 50,000/- after six months. Because of the
increase in price of the spare parts of rolling
machine, P was not able to deliver the machine
at agreed price (Rs. 50,000/0) and increased the
price of rolling machine to Rs 60,000/-.
Alteration

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Waiver
 Discharge of contracts
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2. By Mutual Consent contd…
X promises to deliver certain goods to Y on a
certain date. Before the date of performance, X
and Y mutually agree that the contract will not be
performed.
Rescission
P owes QRs 50,000. P pays to Q and Q accepts, in
satisfaction of the whole debt, Rs 20,000 paid at
the time and place at which the Rs 50,000 were
payable.
Remission
Merger
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 Discharge of Contracts
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3. By Supervening Impossibility
a. Initial Impossibility
b. Subsequent Impossibility
(i) Destruction of subject matter of the contract/V.L.
Narasu v P.V.S. Iyer
(ii) Death or personal incapacity of the parties/Robinson
v Davison
(iii) Change of law
(iv) Declaration of war
(v) Non-existence or non-occurrence of particular state
of things/Krell v. Henry

4. By Lapse of Time
 When time was the essence of contract
 When time was not the essence of contract
Dr. Parul Gupta
 Discharge of Contracts
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5. By the operation of law

i. Death
ii. Insolvency
iii. Merger
iv. Unauthorized material alteration
6. By the breach of contract
1. Anticipatory / Frost v Knight
2. Actual
Dr. Parul Gupta
 Breach of Contract
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A breach of contract amounts to a

broken promise to do or not do
an act.

Case : P v S

Discussion Point
Was the dismissal of Madam P legally wrong
and be treated as breach of contract?
Dr. Parul Gupta
 Remedies for Breach of
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Contract
1. Rescission of the contract (Sec. 64)
2. Suit for damages (Sec. 73)
3. Suit upon Quantum Meruit
4. Suit for specific performance of the
contract
5. Suit for injunction

Dr. Parul Gupta

 Remedies for Breach of
Contract
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 X, a buyer agrees to purchase a specific type of silk for Rs.

5,00,000, but Y, the seller fails to deliver it, normally the
buyer will be forced to go and buy the same elsewhere. If, in
the meantime, the price of silk has gone up by Rs. 1,00,000,
X may sue Y for the loss of Rs. 1,00,000.
2. Suit for damages (Sec. 73)
 Unliquidated damages
 Liquidated damages/ Case: Hadely v Baxendale

 X a party to the contract has paid for a delivery of goods,

but Y, the other party did not ship them, a specific
performance decree might require the goods to be properly
delivered.
3. Suit for specific performance of the contract
Dr. Parul Gupta
 Remedies for Breach of
Contract
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 A contractor is contracted to work on a school. The
contractor does some work but messes up part of the work
(breach of contract). The school suspends the construction
work because of the problem. The contractor is entitled to be
paid for the services he has already done for the school on
the basis of quantum meruit.
4. Suit upon Quantum Meruit

 A landlord might bring an action against a tenant for waste,

in which the right to protect the land-lord's interest in the
ownership of the premises is at issue. The landlord might
apply to the court for an injunction against the tenant's
continuing harmful use of the property.
5. Suit for injunction
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 NEXT SESSION 7
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 The Sales of Goods Act, 1930

Quiz Test Two

Sessions 4 to 6

Dr. Parul Gupta

 20

Dr. Parul Gupta