The Obligation to Perform, and Who Is Bound

"Their respective promises." The obligation is mutual. In most contracts each party is both promisor and promisee, and the order in which they must perform is governed by the reciprocal promise sections, 51 to 54.

"Unless such performance is dispensed with or excused." This is the signpost to the rest of the module. The recognised ways out, each dealt with in its own chapter, are these.

• Tender refused, section 38.
• Impossibility or frustration, section 56.
• Novation, rescission or alteration by agreement, section 62.
• Remission or waiver by the promisee, section 63.
• The promisee's neglect or refusal to afford facilities, section 67.
• Performance becoming unnecessary because the promisee accepted it from a third person, section 41.
• Rescission for a vitiating factor, sections 19 and 19A.

"Or of any other law." Performance may also be excused by a statute outside this Act, for example by an order under insolvency law or by a statutory prohibition arising after the contract.

Second paragraph: death, and the exception for personal skill

The rule is that legal representatives are bound. A legal representative is the person who in law represents the estate of a deceased person, and the liability is limited to the extent of the estate that has come to their hands: a representative does not pay out of their own pocket.

The exception is a contrary intention appearing from the contract, and the commonest source of such an intention is that the contract was for personal skill. Illustration (b) is the standard example: a promise to paint a picture dies with the painter, and neither side can enforce it. The reason is not sentiment but substance: what B bargained for was A's skill, and nobody else can supply it.

How to tell whether a contract is personal. Ask whether the identity of the performer was part of what was bargained for. A promise to deliver a hundred bales of cotton is not personal; a promise to sing, to paint, to write an opinion, or to teach is. This is the same question section 40 asks, and the two sections work together. See [By Whom a Contract Must Be Performed].

A worked example

Anand contracts with Bhavesh on three matters in one week, and then dies.

• He promised to deliver two hundred quintals of rice on 1 October for six lakh rupees. Not a personal contract. Under the second paragraph of section 37 his representatives are bound to deliver, and Bhavesh must pay them the price, on the model of illustration (a). Their liability is limited to the estate.
• He promised to compose an original song for Bhavesh's film. Composition is a matter of personal skill, so a contrary intention appears from the nature of the contract. The promise dies with him, and neither his representatives nor Bhavesh can enforce it, on the model of illustration (b).
• He promised to sell his shop, and before he died he had tendered the conveyance, which Bhavesh refused to accept. Section 37's first paragraph is satisfied by the offer to perform, and section 38 protects him: he is not responsible for non performance and does not lose his rights under the contract, so his estate may still sue Bhavesh.

Now change the first example. The rice contract says "to be delivered personally by Anand, whose selection of grain the buyer relies on". A contrary intention appears from the contract, so the exception applies even though rice is not obviously a personal service.

What it does NOT mean

"Death discharges a contract." As a rule it does not. The estate is bound, unless the contract is personal or a contrary intention appears.

"A legal representative is personally liable." Liability is limited to the extent of the estate that has come into their hands.

"Only actual performance discharges." An offer to perform, properly made and refused, protects the promisor under section 38.

"Section 37 lists the excuses." It signposts them without listing them. They are in sections 38, 41, 56, 62, 63 and 67, and in other laws.

"A contract for services is always personal." Only where the identity or skill of the performer was part of the bargain. A contract to supply cleaning services through employees is not personal; a contract with a named surgeon is.

Quick revision

• s.37, first paragraph: the parties must perform, or offer to perform, their respective promises, unless performance is dispensed with or excused under this Act or any other law.
• The excuses, each with its own chapter: s.38 tender refused, s.41 performance accepted from a third person, s.56 impossibility, s.62 novation, rescission or alteration, s.63 remission, s.67 the promisee's neglect.
• Second paragraph: promises bind the representatives of a promisor who dies before performance, unless a contrary intention appears from the contract.
• Representatives are liable only to the extent of the estate.
• Illustration (a): goods for a price, representatives bound. Illustration (b): a promise to paint a picture, unenforceable on either side after death.
• The test for the exception: was the identity or personal skill of the promisor part of what was bargained for? Compare s.40.

Test yourself

1. State 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 provisions of the Act or of any other law; and promises bind the representatives of the promisors in case of the death of such promisors before performance, unless a contrary intention appears from the contract.

2. Does the death of a party discharge a contract? Not as a general rule. The second paragraph of section 37 binds the legal representatives of a deceased promisor, to the extent of the estate that has come to their hands. The exception is where a contrary intention appears from the contract, which it usually does where the promise depends on the promisor's personal skill, as illustration (b) shows with a promise to paint a picture.

3. Name four ways in which performance may be dispensed with or excused. By a valid offer of performance that is refused, under section 38; by supervening impossibility or frustration, under section 56; by novation, rescission or alteration of the contract by agreement, under section 62; and by the promisee remitting or dispensing with performance, under section 63. Section 41, where the promisee accepts performance from a third person, and section 67, where the promisee neglects to afford facilities, are two more.

4. How do you decide whether a contract is one of personal skill? By asking whether the identity or the personal skill of the promisor formed part of what the promisee bargained for. Where it did, a contrary intention appears from the contract and the promise does not survive the promisor's death; where the promise could be performed as well by anyone competent, the representatives are bound.

5. Why does section 37 say "perform, or offer to perform"? Because the law cannot require a promisor to succeed in performing where the promisee will not accept. A promisor who makes a proper offer of performance, satisfying the conditions in section 38, has done all that is required of him; he is not responsible for the non performance that follows and he does not lose his own rights under the contract.