Performance, Discharge, Breach, and Remedies
Once a contract is validly formed, the next stage is performance — fulfilling promises made. The Indian Contract Act (Sections 37–75) details obligations of parties, modes of discharge, and remedies for non-performance.
Key Provisions
- Section 37: Parties must perform or offer to perform their promises.
- Sections 38–39: Define performance refusal and anticipatory breach.
- Sections 55–57: Deal with time-bound and impossible acts (doctrine of frustration).
- Section 73: Compensation for loss or damage caused by breach.
- Section 74: Compensation for breach where penalty stipulated.
- Section 75: Right to compensation upon lawful rescission.
Doctrine of Frustration (Section 56)
If an act becomes impossible or unlawful after contract formation, it becomes void. The pandemic cases reinforced this doctrine — where force majeure clauses excused performance.
Recent Judicial Developments
Indian courts now recognize digital performance, including online contracts and e-signatures. The Mediation Act, 2023 adds an alternative route for dispute settlement before seeking judicial remedies.
Exam Tip
In judiciary exams, case-based questions often test how you apply Sections 55, 56, 73, and 74 to real-life scenarios involving delay or non-performance.
Review Questions (Lesson 2)
- Explain the difference between anticipatory breach and actual breach under the Indian Contract Act.
- What is the doctrine of frustration under Section 56? Provide examples.
- Discuss how compensation is determined under Sections 73 and 74.
- What is the significance of time in performance of contracts under Section 55?
- How does the Mediation Act, 2023 impact the enforcement of contractual remedies?