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smu assignment summer 2014 answers mba semester 3 - MB0051-Legal Aspects of Business Q1. Explain the performance of contracts

Performance of a contract takes effect when the parties to the contract fulfill their obligations within the time and manner specified under the contract.

Sections 2 (d), 23-25 and 185 of the Indian Contracts Act deal with consideration. One of the essential elements of a valid contract is that it must be supported by consideration. In simple terms, consideration is what a promisor demands as the price for his/her promise. The term consideration is used in the sense of quid pro quo, i.e., something in return. The consideration
need not be in terms of money; it may even be some benefit, right, interest or profit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other party. Additionally, a promise by one party may be a consideration for the promise of the other party.
Sections 37-67 of the Contracts Act deal with the performance of a contract. A contract creates obligations. Performance of a contract takes effect when the parties to the contract fulfill their obligations within the time and manner specified under the contract. 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 provisions of law (Section 37).

2 Offer of performance
It may happen that the promisor offers performance of his/her obligation under the contract at the proper time and place, but the promisee refuses to accept the performance. This is called ‘tender’ or ‘attempted performance’. If a valid tender is made and is not accepted by the promisee, the promisor shall not be responsible for non-performance nor shall he/she lose his/her rights under the contract (Section 38).

3 Onus of performance
The promise may be performed by the promisor himself/herelf, his/her agent or his/her legal representative. In case there was an intention of the parties that the promise must be performed by the promisor himself/herself, such a promise is to be performed by him/her only. Thus, where A promises to paint a picture for B, then A must perform this promise personally. If there is no such intention of the parties, then the promisor may employ a competent person to perform the promise. If A had promised to deliver some items of grocery to B, A may perform this promise either personally or have it delivered to B through someone. In case of death of the promisor, the legal representative must perform the promise unless a contrary intention is mentioned in the contract.  

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