Introduction
Performance is the essence of every contract. A contract enables a legal obligation upon the contracting parties. Non-performance of a contract may create trouble for the contracting parties. The performance of a contract comes out when the party to the contract will enter into the contract. A contract is a legally binding agreement between the contract’s parties, and they have to perform their obligation till in the existence of the contract. The standard way of performance is to discharge the contract by performing their part of the obligation. In the same way, the performing party is entitled to receive the performance of the other party of the contract.
When both the contracting parties fulfill entirely their obligations towards the terms and conditions of the contract, that can be called a complete performance. In this article, we discuss the performance of the contract, what is the meaning of performance, and the different types of performance of a contract, so stay tuned and read below;
What is the performance of the contract?
In simple words, the performance of a contract means when both contracting parties mutually fulfill their obligations under the terms and conditions of the agreement.
Let’s understand with an example of contract performance. Suppose A wants to buy books, so A visits a shop and buys books. The shopkeeper delivers the books to A and A pays for the amount them. Here, a contract is discharged by mutual performance.
Sometimes, the court may interfere in the performance of obligations between the contracting parties. If, for any reason, one of the contracting parties does not perform its obligations, the effective party can approach the court and pray for that performance. In this way, the rule of contract law says that every contract must be complete according to the law, and any work should be done until the end of the obligations.
A contract must be fulfilled by the contracting parties within the time and place mentioned in the contract. After the parties complete their obligations as per the contract, the contract will automatically be discharged. But this is not the only single way to discharge a contract’s performance. Some other ways can be applied for discharging contracts.
For example, sometimes, an agreement may result in non-performance contracts. Or attempt to perform a contract, which may also be an alternative to actual performance. All of these may result in a complete discharge of agreement.
What does section 27 of the Indian Contract Act say?
As per this section, the contract’s party must perform or offer to perform their promises concerning the contract until no dispensed or excuse is given by this act or any other law.
Promises in the contract are legally binding to the promisor’s representatives if the promisor dies before performance unless an adverse intention is not incorporated into the contract.
Let’s understand that thing with an example. Suppose a contract is made between A and B. According to that contract, A promises to supply goods to B on the specified date of 1000. Before the contracted date, A dies. In that situation, a’s legal representatives must supply those goods to B. Similarly, B is duty-bound to pay the sum of 1000 to the legal representatives of A.
Types of performance by contract law
Different methods can be considered as performance or an act of performing, which counts as attempted. Some of them are given below;
Actual Performance
When a contracting party thoroughly performs his part of the obligation as per the terms and conditions of the contract, it is called the actual performance of the contract. Through the actual performance, a promisor discharges his liabilities towards the contract from his side. In this way, a promisor ceases to exist in his obligation.
Let’s understand that concept with an example. Suppose A is ready to give a cycle to B, and B promises A to pay the sum on the delivery date. As per their understanding, A delivered the cycle to B on a fixed date, and B also paid A. The transaction between contracting parties is called actual performance. In some cases, actual performance can be divided into different aspects, such as substantial and partial.
Substantial Performance
Substantial performance means that most of the contract’s obligations are nearly duly completed. However, we can only say the agreement is partially completed. However, the standard of performance is enough to avoid claiming a breach of contract by the other party. In this concept, the party has performed a significant part of the contract, but some of the non-material parts have not been completed, which is left uncompleted.
One thing we should note here is that the sufferer party is entitled to claim recovery of damage due to the substantial performance of not completing the contract. That can depend upon what parts of the contract remain left to perform, and the value of compensation is counted as that particular non-performing part.
Let’s understand that with an example: A signed a contract with B to construct a shop for him. Per the terms of the said contract, A has to paint the shop after completing the construction work. For some reason, A failed to paint the shop in that situation. The said contract is substantially performed by A and does not fall under a breach of contract. However, B is entitled to recover the paint cost, which A has not completed.
Partial performance
In partial performance, as the suggested name suggests, the contracting party has performed the contract in a part that the other contracting party accepts. This concept will arise when the delivery of goods is not fully complete or any services are not fully provided.
When we think about partial performance and substantial performance, both look like similar features, but there is a little bit of difference between them that we should know;
- In partial performance, the part of the performance must be accepted by the other party. And there is a choice for the other party whether they accept or not. In contrast, substantial performance is legally enforceable on that party who has left part of the performance.
- The payment is made based on different norms on significant performance. That may be counted based on how much it deserved. Suppose half part of the performance is done. Then, half of the negotiated payment will be paid. Here, in a substantial performance of a contract, the contracting party is entitled to recover a sum of work they do even if the contract is not fully completed.
Attempted performance of a contract
Sometimes, the performance is not completed and becomes due. In the case of attempted performance, the promisor provides an offer to perform his obligation under the contract. But if the promisee does not accept the performance and refuses it, that situation is called a discharge of contract tender.
Conclusion
The performance of the contract is referred to as fully completed obligations between the contracting parties towards the terms and conditions of the contract. However, if for any reason it is not, some different kinds of performance are available for the contracting parties, such as Actual Performance, Substantial Performance, Partial performance, etc. Through these, the contracting parties can discharge their liabilities and obligations.
