Indian Contract Act, 1872 - Performance, Discharge, Breach and Remedies
What the exam tests
Performance, discharge and remedies: when obligations are fulfilled, how a contract ends, and what damages or equitable relief follow breach.
Core rules
- Performance must match the promise (s 37); tender of performance must be unconditional and made at the proper time and place (s 38). Joint promises are governed by ss 42-45; time is usually not of the essence unless expressly or by nature of contract (s 55).
- Discharge may be by performance, agreement (novation, rescission, alteration, remission under ss 62-63), impossibility (s 56), operation of law, or breach. Supervening impossibility must be objective, not mere difficulty or commercial hardship.
- Remedies: damages under s 73 are compensatory and limited to losses naturally arising in the usual course or those the parties knew of at formation (Hadley v Baxendale). Section 74 deals with a sum named in the contract: reasonable compensation not exceeding that sum, whether it is liquidated damages or a penalty.
- Equitable remedies include specific performance and injunction under the Specific Relief Act, 1963; quantum meruit may be available where a contract is discharged before completion.
Worked example
A contracts to deliver a machine by 1 June; delay is not expressed to be of the essence. B loses a special government order because of late delivery. B can recover ordinary losses from the delay if foreseeable, but the special loss only if A knew of that order when contracting. A named sum of ₹2 lakh is a ceiling, not automatic damages.
Traps
- Treating every late performance as repudiation.
- Awarding the named sum automatically under s 74.
- Ignoring foreseeability and the special-knowledge limb.
- Confusing impossibility with inconvenience.