Performance of Reciprocal Promises

In one line

In a two sided bargain somebody has to go first, and these four sections decide who, what happens if he does not, and what happens if the other side stops him.

In the words a student can write in an exam: section 2(f) of the Indian Contract Act 1872 defines reciprocal promises as promises which form the consideration or part of the consideration for each other. Section 51 provides that where they are to be simultaneously performed, no promisor need perform unless the promisee is ready and willing to perform his; section 52 fixes the order of performance, by the contract where it is expressly fixed and otherwise as the nature of the transaction requires; section 53 makes the contract voidable at the option of a party who is prevented from performing, with compensation; and section 54 says that a party who fails to perform the promise that must come first cannot claim performance of the other and must make compensation.

Why these sections exist

Almost every contract is a set of reciprocal promises. The seller promises goods, the buyer promises money, and each promise is the consideration for the other.

That produces a practical problem the parties rarely address. If the seller says "pay me first" and the buyer says "deliver first", both are refusing to perform and neither is obviously in the wrong. Somebody has to be told to move.

Sections 51 to 54 are the Act's answer, and they work through three questions in order.

1. Are the promises to be performed at the same time? If so, neither can demand performance without being ready himself. That is section 51.
2. If not, in what order? As the contract fixes, or as the nature of the transaction requires. That is section 52.
3. What if somebody defaults or obstructs? Sections 53 and 54.

Section 51: simultaneous performance, and readiness

"When a contract consists of reciprocal promises to be simultaneously performed, no promisor need perform his promise unless the promisee is ready and willing to perform his reciprocal promise."

Its illustrations:

"(a) A and B contract that A shall deliver goods to B to be paid for by B on delivery. A need not deliver the goods, unless B is ready and willing to pay for the goods on delivery. B need not pay for the goods, unless A is ready and willing to deliver them on payment.

(b) A and B contract that A shall deliver goods to B at a price to be paid by instalments, the first instalment to be paid on delivery. A need not deliver, unless B is ready and willing to pay the first instalment on delivery. B need not pay the first instalment, unless A is ready and willing to deliver the goods on payment of the first instalment."