Samacheer Kalvi Class 11 Commerce Chapter 30 Performance of Contract

I. Choose the Correct Answer

Question 1. On the valid performance of the contractual obligations by the parties, the contract
a. Is discharged
b. Become enforceable
c. Becomes void
d. Becomes legal
Answer: (a) Is discharged
In simple words: When both parties do what they promised in a contract, the contract is finished. This means the contract no longer has any power or responsibility for either side.

🎯 Exam Tip: Remember that "discharge" means the contract's duties are fulfilled and it comes to an end, freeing both parties from further obligations.

Question 2. Which of the following persons can perform the contract?
a. Promisor alone
b. Legal representatives of promisor
c. Agent of the promisor
d. All the options
Answer: (d) All the options
In simple words: A contract can be carried out by the person who made the promise, their legal helper, or someone they appoint to act for them. All these people can perform the contract duties.

🎯 Exam Tip: Note that the option "All the above" should always be rephrased as "All the options" for standard formatting.

Question 3. A, B, C jointly promised to pay Rs.50,000 to D. Before performance of the contract, C dies. Here, the contract
a. Becomes void on C's death
b. Should be performed by A and B along with C's legal representatives.
c. Should be performed by A and B alone.
d. Should be renewed between A, B and D.
Answer: (b) Should be performed by A and B along with C's legal representatives.
In simple words: If multiple people promise to do something together and one of them dies, the others, along with the dead person's legal helpers, must still fulfill the promise. The contract does not end just because one person passed away.

🎯 Exam Tip: In joint promises, the obligation usually passes to the legal representatives of a deceased party unless the contract specifically states otherwise.

Question 4. Which of these parties cannot demand performance of promise?
a. Promisee
b. Any of the Joint Promisees
c. On the death of a Promisee, his Legal Representative.
d. Stranger to the Contract
Answer: (d) Stranger to the Contract
In simple words: Only the people directly involved in a contract or their legal helpers can ask for the promise to be kept. Someone who is not part of the contract cannot demand its performance.

🎯 Exam Tip: This question tests your knowledge of "privity of contract," which means only parties to a contract can sue or be sued on it.

Question 5. A person is said to be a third person if he is not a
a. promisor
b. promise
c. agent
d. Legal Representative
Answer: (c) agent
In simple words: A third person is someone who is not the original promisor, promisee, or their legal helper. An agent, however, acts on behalf of the promisor, so they are not considered a "third person" in the context of the main parties to the contract.

🎯 Exam Tip: Understand that an agent is considered an extension of the promisor or promisee, acting with their authority, not an outside party.

II. Very Short Answer Questions

Question 1. State the ways of Performing a Contract.
Answer: There are mainly two ways to perform a contract:
1. Actual Performance: This is when a party fully completes all their duties exactly as agreed in the contract.
2. Attempted Performance: This happens when a party tries to perform their part of the contract, but the other party refuses to accept it. This is also called tender of performance. Even if not accepted, it can still count as performance. An attempt to perform may be as good as actual performance in terms of legal effect.
In simple words: A contract can be done in two ways: either you do everything you promised (actual performance), or you try to do it but the other person doesn't accept (attempted performance).

🎯 Exam Tip: Clearly differentiate between actual performance, where duties are completed, and attempted performance, where duties are offered but not accepted.

Question 2. Who is a Legal Representative?
Answer: A legal representative is a person who looks after the legal matters of another individual. For example, an executor or administrator of a deceased person's property, or a court-appointed guardian for a minor or someone unable to manage their own affairs. These representatives act on behalf of the original person in legal dealings. They step into the shoes of the person they represent for legal purposes.
In simple words: A legal representative is someone who handles the legal business for another person, like a guardian for a child or a person in charge of a dead person's property.

🎯 Exam Tip: Remember key examples like executors, administrators, and guardians to illustrate your definition of a legal representative.

Question 3. Who is an agent?
Answer: An agent is a person hired by a promisor to carry out their promise, especially if the contract does not require the promisor to perform personally. According to Paragraph 2 of Section 40, a promisor can use a competent agent to fulfill a promise if the contract is not based on the promisor's personal skills or qualities. An agent acts on behalf of the principal and creates legal relations between the principal and third parties.
In simple words: An agent is someone a person hires to do their work or fulfill a promise in a contract, especially if the contract doesn't need that person to do it themselves.

🎯 Exam Tip: Highlight that an agent can perform a contract only if personal performance by the promisor is not an essential condition.

Question 4. Define Reciprocal Promise.
Answer: Reciprocal promises are promises that serve as consideration for each other. This means that for each promise made, the other party makes a promise in return, and these mutual promises support the agreement. Both parties are obligated to perform their part because of the other party's promise. These promises create a mutual exchange of commitments.
In simple words: Reciprocal promises are when two people make promises to each other, and each promise is the reason or payment for the other promise.

🎯 Exam Tip: Emphasize that in reciprocal promises, the consideration from one side is the promise from the other side, not necessarily an immediate action.

Question 5. By whom must contracts be performed?
Answer: Contracts must be performed by the following individuals:
1. Promisor himself
2. Agent
3. Representatives (Legal representatives)
4. Third-person (when accepted by the promisee)
5. Joint Promisors (when multiple people make a joint promise) Each of these entities is responsible for ensuring the contract's terms are met.
In simple words: Contracts can be done by the person who promised, their agent, their legal helpers, someone else if the promisee agrees, or by all people who made a promise together.

🎯 Exam Tip: Remember this list covers the primary parties and their extensions who have the legal capacity and obligation to perform a contract.

III. Short Answer Questions

Question 1. What is a Valid tender?
Answer: A valid tender of performance is an offer to perform the contract that meets specific requirements. For a tender to be valid, it must be:
• Unconditional: It cannot have any new conditions attached.
• For the whole obligation: It must cover the entire promise, not just a part, unless the contract allows installments.
• Made by a competent person: The person making the tender must be able and willing to perform.
• At the proper time and place: It must happen at the time and location specified in the contract.
• In proper form: If there's a specific way to offer performance (e.g., cash payment), it must follow that form. A proper tender signifies that the promisor has done their part, even if the promisee refuses to accept.
In simple words: A valid tender is when you offer to do your part of a contract exactly as agreed, with no extra conditions, at the right time and place.

🎯 Exam Tip: Knowing the conditions for a valid tender is crucial as it determines if a party has fulfilled their obligation, even if the other party doesn't cooperate.

Question 2. Who can execute and Perform a Contract?
Answer: A contract can be executed and performed by:
• The promisor himself: According to Paragraph 1 of Section 40, if the contract's nature shows that the parties intended for the promisor himself to perform the promise, then only the promisor can do it. This applies to contracts that involve personal skill, taste, or credit.
• His legal representatives: If the contract does not involve personal skill and the promisor dies, their legal representatives must perform the contract.
• Any other competent person employed by him: If the contract does not require personal performance, the promisor can have a competent person (like an agent) perform the promise on their behalf. This flexibility allows for broader performance options. The key is whether the contract is personal in nature or not.
In simple words: The person who made the promise must do it, unless it's not a personal job, then their legal helper or someone they hire can do it instead.

🎯 Exam Tip: The critical factor here is whether the contract requires the promisor's personal skill or not; this determines who can perform it.

Question 3. Who can demand performance?
Answer: The following parties can legally demand the performance of a valid contract:
• Promisee: The person to whom the promise is made can always demand its performance.
• Legal Representative: If the promisee dies, their legal representative can demand performance.
• Third-Party: In certain specific cases, a third party can demand performance, especially if the contract was made for their benefit or if they have an interest in it, and the promisee accepts their involvement. However, typically, a stranger to the contract cannot demand performance. These rules ensure that the obligations within a contract are duly fulfilled to the rightful parties.
In simple words: Only the person who was promised something, or their legal helper if they die, can ask for the contract to be done. Sometimes, a third person can also ask if the contract was made for their good.

🎯 Exam Tip: Remember the general rule of "privity of contract" where only parties to the contract can enforce it, with limited exceptions for third parties.

Question 4. Write a note on the benefits of Reciprocal Promise.
Answer:
Meaning: Reciprocal promises are promises that act as the consideration or part of the consideration for each other. This means both parties promise something in exchange for the other party's promise.
Benefits of Reciprocal Promise:
• No chance of losses: Since both parties work together simultaneously, there is less risk of one party suffering losses due to the other's non-performance.
• Independent performance: Each party works on their promises independently, which helps make the entire promise successful without constant supervision. This shared responsibility ensures greater commitment.
• No loss due to lack of time: With mutual commitment and often simultaneous work, there is a lower chance of delays leading to losses, as timelines are respected by both sides.
In simple words: Reciprocal promises are when people promise things to each other. They help avoid losses, allow each person to do their part well, and prevent delays because everyone is working together.

🎯 Exam Tip: When discussing reciprocal promises, focus on the mutual exchange and how this structure reduces risk and promotes efficiency in fulfilling contractual obligations.

Question 5. Who is a Joint Promisors?
Answer: Joint promisors are two or more persons who make a promise together. Their responsibilities and rights are governed by specific sections of the Indian Contract Act.
Joint Promisors:
(a) Devolution of Joint Liabilities (Section 42): Section 42 of the Indian Contract Act states that if two or more persons make a joint promise, then all these persons must fulfill the promise during their lifetime. If one dies, the surviving promisors along with the legal representatives of the deceased must fulfill it. After the death of the last survivor, the representatives of all jointly must fulfill the promise. This ensures the promise is always kept.
(b) Devolution of Joint Rights (Section 45): Section 45 says that if a promise is made to two or more persons jointly, then the right to demand performance rests with them together during their joint lives. If one dies, this right passes to the survivors along with the deceased person's representatives. After the last survivor dies, the representatives of all jointly hold this right. This means the benefit of the promise stays with the group.
In simple words: Joint promisors are a group of people who make a promise together. If one dies, the others and the dead person's legal helpers must still keep the promise. If a promise is made to a group, all of them have the right to get it, and if one dies, their legal helpers join the others.

🎯 Exam Tip: Distinguish between joint liabilities (who must perform the promise) and joint rights (who can demand performance) under a joint promise.

IV. Long Answer Questions

Question 1. Explain rules relating to place of performance of promise:
Answer: The place of performance of a promise is crucial in contract law, and rules are laid out in Section 47 of the Indian Contract Act:
• Promise to be performed on a certain day without application by the promisee: If a promise is to be performed on a specific day, and the promisor is not expected to ask the promisee for instructions, the promisor must undertake to perform it without the promisee's request. This places the initiative on the promisor.
• Specific time and place for performance (Section 47): In such cases, the promisor must perform the promise at any time during the usual business hours on the agreed day, and at the specific place where the promise is meant to be performed. This ensures clarity and avoids disputes about delivery or action. For instance, if a contract says goods will be delivered at a specific warehouse by 5 PM, the promisor must ensure delivery happens within that time and place.
In simple words: When a promise needs to be kept, it must be done at the right place and time. If a specific day is set, the person who made the promise must perform without being asked. If a time and place are named, it must be done there during normal business hours.

🎯 Exam Tip: Remember that Section 47 emphasizes clarity on time and place to prevent confusion and ensure timely fulfillment of obligations.

Question 2. Elucidate the provision regarding time as a factor in performance.
Answer: Time is an important factor in contract performance, covered by Sections 46 and 47 of the Indian Contract Act:
1. Performance within a reasonable time (Under Section 46): When a promise does not specify a time for performance, the promisor must perform it within a "reasonable time." What counts as a reasonable time depends on the situation, common business practices, or the intention of the parties when they entered the contract. For example, if A orders books in July that should be supplied quickly, performance within 4 to 5 days of July would be considered reasonable. This prevents indefinite delays.
2. Specified time and place for performance (Under Section 47): If the promise is to be performed on a certain day, the promisor can perform it without the promisee needing to ask. According to Section 47, the promisor must perform the promise at any time during the usual business hours on that day and at the place where the promise ought to be performed. This ensures that a fixed deadline and location are met. These rules help avoid uncertainty and ensure prompt completion of duties.
In simple words: If a contract doesn't set a time, it must be done in a "reasonable" time, depending on the situation. If a specific time and place are set, the promise must be performed then, during normal working hours, at that exact location.

🎯 Exam Tip: Highlight that "reasonable time" is subjective and depends on context, while "specified time" requires strict adherence to the agreed-upon deadline.

Question 3. How do you think appropriation of payments takes place?
Answer: Appropriation of payments refers to deciding which debt a payment should cover when a debtor owes several debts to the same creditor but pays an amount that isn't enough to clear all of them. The rules for this are found in Sections 59 to 61 of the Indian Contract Act.
Appropriation of Payments: If a debtor owes several distinct debts and makes a payment that is too little to pay off all of them, the question arises as to which specific debt the payment should apply. If the debtor clearly states which debt the payment is for, then the creditor must apply it to that specific debt. This gives the debtor control over their payments.
Application of payment (where debt is not indicated - Section 60): If the debtor does not specify which debt the payment is for, then the creditor has the power to decide. The creditor can apply the payment to any lawful debt that the debtor owes them. This allows the creditor some flexibility.
Application of payment (where neither party appropriates - Section 61): If neither the debtor nor the creditor specifies which debt the payment is for, then the law applies the payment in discharge of debts in the order of time they were incurred. Older debts are paid off first. If debts are of equal standing (e.g., due on the same date), the payment is applied to each of these debts proportionally. This method ensures fairness and resolves ambiguity.
In simple words: When someone owes many debts but makes a payment too small for all of them, there are rules to decide which debt gets paid. The person paying can choose, or if they don't, the person owed can choose. If neither chooses, the oldest debts get paid first, or all equal debts get a fair share.

🎯 Exam Tip: Remember the three scenarios: debtor's choice, creditor's choice, and legal appropriation (oldest first or proportional) when no choice is made.

11th Commerce Guide Performance of Contract Additional Important Questions and Answers

I. Choose the Correct Answer:

Question 1. Every promise and every set of promises, forming the consideration for each other is an
a. agreement
b. contract
c. offer
d. acceptance
Answer: (a) agreement
In simple words: When people make promises to each other, and these promises act as the reason or value for each other, it creates an agreement. An agreement is a basic step before a contract.

🎯 Exam Tip: Understand that an agreement is a broader term, and a contract is a legally enforceable agreement.

Question 2. When, at the desire of the promisor, the promisee or any other person has done or abstained from doing or, does or abstain from doing or promises to do or to abstain from doing something, such act or abstinence or promise under section 2(d) is called
(a) Reciprocal promise
(b) consideration for the promise
(c) counteroffer
(d) acceptance
Answer: (b) consideration for the promise
In simple words: When someone does something, or promises to do something, or stops doing something, at the request of the person who made the promise, that action or promise is called 'consideration'. It's what each party gives up or does in exchange for the other's promise.

🎯 Exam Tip: Consideration is the 'price' for which the promise of the other is bought, and it can be an act, an abstinence, or a promise.

Question 3. Promises which form the consideration or part thereof, for each other under section 2(F) are called
(a) acceptances for different proposals
(b) agreements
(c) reciprocal promises
(d) consideration
Answer: (c) reciprocal promises
In simple words: When promises are exchanged, and each promise acts as the value or reason for the other promise, they are called reciprocal promises. They are linked and depend on each other.

🎯 Exam Tip: Section 2(F) specifically defines reciprocal promises as those forming the consideration for each other.

Question 4. In a valid contract, what comes first
a. enforceability
b. acceptance
c. promise
d. proposal
Answer: (d) proposal
In simple words: For a contract to be made, someone first needs to make an offer or a proposal. Then, if the other person accepts it, a promise can be formed, leading to an enforceable contract.

🎯 Exam Tip: The sequence of contract formation typically starts with a proposal (offer), followed by acceptance, leading to a promise, and eventually, enforceability.

Question 5. The void agreement signifies ...........
a. agreement illegal in nature
b. agreement not enforceable by law
c. agreement violating legal procedure
d. agreement against public policy
Answer: (b) agreement not enforceable by law
In simple words: A void agreement is one that cannot be upheld or enforced by a court of law. It means the agreement has no legal effect and cannot create any legal rights or duties.

🎯 Exam Tip: A key difference is that a "void agreement" has no legal standing from the start, while a "voidable contract" is valid until one party chooses to cancel it.

II. Very Short Answer Questions:

Question 1. What do you mean by the appropriation of payments?
Answer: Appropriation of payments refers to the process of deciding which specific debt a payment should be applied to. This issue arises when a person owes several debts to the same creditor but makes a payment that is not enough to pay off all of them. The rules of appropriation ensure that a payment is properly credited. This allocation process helps maintain clarity in financial records.
In simple words: Appropriation of payments means choosing which debt gets paid when someone owes many debts but only pays a part of the total.

🎯 Exam Tip: Understand that the purpose of appropriation is to avoid confusion and properly account for partial payments against multiple outstanding debts.

Question 2. What is the nature of the third person with regard to the performance of the contract?
Answer: According to Section 41, if a promisee agrees to accept the performance of a promise from a third person, then the promisee cannot later force the original promisor to perform it. This means that if a third party fulfills the contract and the promisee accepts it, the original promisor is then free from their obligation. The promisee effectively waives their right against the original promisor by accepting performance from someone else.
In simple words: If someone outside the contract does what was promised, and the person who was supposed to get it agrees, then the original promise-maker is no longer responsible.

🎯 Exam Tip: This rule highlights that performance by a third party, if accepted by the promisee, can discharge the original promisor's liability.

III. Short Answer Questions:

Question 1. Explain the ways of performing a contract:
Answer: There are mainly two ways a contract can be performed:
1. Actual Performance: This happens when a party fully completes everything they agreed to do under the contract. In actual performance, the party must fulfill all their duties and obligations as stated in the contract. This is the ideal way to perform a contract.
2. Attempted Performance: This occurs when a party offers to perform their part of the contract, but the other party refuses to accept it. This is also called a 'tender of performance.' Even if the offer is not accepted, a valid tender of performance is legally considered as good as actual performance of a promise, freeing the offering party from further liability. This helps protect the party who is ready to perform.
In simple words: A contract can be performed either by actually doing everything promised, or by trying to do it but the other person doesn't accept the offer.

🎯 Exam Tip: Emphasize that a valid attempted performance (tender) can discharge the promisor from liability, even if the promisee rejects it without a valid reason.

Question 2. Explain the term Devolution of Joint Rights:
Answer: Devolution of Joint Rights, as explained in Section 45 of the Indian Contract Act, refers to how the right to claim performance of a promise passes when a promise is made to two or more people jointly. It means that "When a person has made a promise to two or more persons jointly, then unless there is a contract to the contrary, the right to claim performance rests as between him and them, with them during their joint lives: and after the death of them with representatives of such deceased person jointly with survivors, and after the death of last survivor, with the representatives of all jointly." In simpler terms, the right to benefit from the promise belongs to all the joint promisees. If one dies, their legal representatives join the surviving promisees in holding that right. After all original promisees have passed away, their collective legal representatives will hold the right. This ensures the promise can always be enforced by the correct parties.
In simple words: If a promise is made to a group of people, all of them together have the right to claim it. If one person in the group dies, their legal helpers join the others to claim the promise.

🎯 Exam Tip: Distinguish devolution of joint rights (who can claim the promise) from joint liabilities (who must perform the promise).

IV. Long Answer Questions

Question 1. State the essentials of a valid tender of performance:
Answer: For a tender of performance to be considered valid in law, it must meet several essential requirements:
• It must be unconditional: The offer to perform must not have any new terms or conditions attached to it that were not part of the original contract.
• It must be for the whole obligation: The tender must cover the entire promise. It cannot be in parts or installments if the contract requires full performance at once. The person offering must be in a position and willing to perform completely.
• It must be at the proper time and place: The tender must be made at the exact time and location specified in the contract. If no time is fixed, it must be within a reasonable time.
• It must be in proper form: If the contract specifies a particular way for the tender to be made (e.g., in writing, or in a specific currency), that form must be followed.
• It must be made to a proper person: The offer must be made to the promisee or their authorized agent. Making it to the wrong person won't count as valid.
• In case of goods, the promisee must be given reasonable opportunity to inspect: If the tender involves goods, the promisee must have a fair chance to check if the goods meet the contract's quality and quantity standards.
• It may be made to one of the several joint promisees: If a promise is made to multiple people jointly, a valid tender to just one of them is generally sufficient. Meeting these criteria ensures that the promisor has done their duty.
In simple words: A valid offer to perform a contract must be complete, without new conditions, at the right time and place, made to the right person, and allow for inspection if it involves goods.

🎯 Exam Tip: When listing essentials, use clear, concise points and remember that each condition is crucial for the tender to be legally effective.

Question 2. Explain the types of Reciprocal Promises:
Answer: Reciprocal promises, where each promise forms the consideration for the other, can be categorized into different types based on their relationship and order of performance:
1. Mutual and Independent: In this type, each party must perform their promise independently, regardless of whether the other party has performed theirs. The performance of one promise does not rely on the prior performance of the other. For example, Ramu agrees to pay Somu for rice supplied on June 10th, and Somu promises to deliver rice on June 18th. These promises stand on their own.
2. Mutual and Dependent: Here, the performance of one party's promise directly depends on the prior performance of the other party's promise. One promise is conditional on the other being fulfilled first. For example, A agrees to build a house for B, but B agrees to supply the cement for the construction. A's promise to build depends on B first supplying the cement. One must happen before the other.
3. Mutual and Concurrent: In this type, the two promises are meant to be performed at the same time, or simultaneously. Both parties are expected to perform their part at the same moment, whenever possible. For instance, in a cash sale, the buyer pays the money and the seller delivers the goods at the same time. These different types help clarify how and when each party's obligations are met.
In simple words: Reciprocal promises can be independent (done separately), dependent (one must happen before the other), or concurrent (done at the same time).

🎯 Exam Tip: For each type, remember to provide a simple, illustrative example to clearly demonstrate the relationship between the promises.