What is Contract?

          According to Section 2(h) of the Indian Contract Act, 1872 "an agreement enforceable by law is a contract.  Performance of a Contract takes place when the parties to the contract fulfil their obligations arising under the contract within the time and in the manner prescribed.


Contracts which need not be performed 


  • 1. When its performance becomes impossible (section .56 of I.C.A) 


Section 56 of the Indian Contract Act, 1872 runs as follows:

               An agreement to do an act impossible in itself is void. Contract to do act afterward becoming impossible or unlawful: A contract to do an act which, after the contract is made, becomes impossible or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.


  • 2. When the parties to it agree to substitute a new contract for or to rescind or alter it (Section 62 of I.C.A)


Section 62 of Indian Contract Act, 1872 runs as follows:

               If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed.

Examples 

         (a) A owes money to B under a contract. It is agreed between A,  B and C, that B shall thenceforth accept C as his debtor, instead of A. The old debt of A to B is at an end, and a new debt from C to B has been contracted.

         (b) A owes B 10,000 rupees. A enters into an agreement with B, and gives B a mortgage of his (A’s), estate for 5,000 rupees in place of the debt of 10,000 rupees. This is a new contract and extinguishes the old.

         (c) A owes B 1,000 rupees under a contract, B owes C 1,000 rupees, B orders A to credit C with 1,000 rupees in his books, but C does not assent to the agreement. B still owes C 1,000 rupees, and no new contract has been entered into.


  • 3. When the promisee dispenses with or remits, wholly or in part, the performance of the promise made to him or extends the time for such a performance or accepts any satisfaction for it (Section. 63 of I.C.A)
Section 63 of Indian Contract Act, 1872 runs as follows:


         Promise may dispense with or remit performance of promise Every promise may dispense with or remit, wholly or in part, the performance of the promise made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit.

Illustrations

           (a) A promises to paint a picture for B. B afterwards forbids him to do so. A is no longer bound to perform the promise.

          (b) A owes B 5,000 rupees. A pays to B, and B accepts, in satisfaction of the whole debt, 2,000 rupees paid at the time and place at which the 5,000 rupees were payable. The whole debt is discharged.


  • 4. When the person at whose option it is voidable, rescind it (Section 64 of I.C.A) 
Section 64 of Indian Contract Act, 1872 runs as follows:


                         When a person at whose option a contract is voidable rescinds it, the other party thereto need to perform any promise therein contained in which he is the promisor. The party rescinding a voidable contract shall, if he have received any benefit thereunder from another party to such contract restore such benefit, so far as may be, to the person from whom it was received.


  • 5. When the promisee neglects or refuses to afford the promisor reasonable facilities for the performance of his promise ( Section 67 of I.C.A) 


Section 67 of Indian Contract Act, 1872 runs as follows:

                  If any promisee neglects or refuses to afford the promisee reasonable facilities for the performance of his promise, the promisor is excused by such neglect or refusal as to non-performance caused thereby. 


Example: 

           A contracts with B to repair B’s house. B neglects or refuses to point out to A the places in which his house requires repair. A is excused for the non-performance of the contract, if it is caused by such neglect or refusal.


  • 6. When it is illegal.

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