ACCEPTED PART PERFORMANCE OF A CONTRACT IMPLIES

COMPLETE SATISFACTION: SECTION 63 OF THE INDIAN

CONTRACT ACT 1872

Submitted to:
MR. Vishal Dixit
(Faculty of law)

Submitted By:
Harish Kumar Salame

B.A. LLB (Hons)

`Roll No. : 55
Semester- I

Hidayatullah National Law University Raipur

Uparwara Post, Abhanpur, New Raipur, 491663(C.G.)

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 ACKNOWLEDGEMENTS

I feel highly elated to work on this dynamic topic on “ACCEPTED PART PERFORMANCE
OF A CONTRACT IMPLIES COMPLETE SATISFACTION: SECTION 63 OF THE
INDIAN CONTRACT ACT 1872”. The practical realization of this project has obligated the
guidance of many persons. I express my deepest regard for our faculty Mr. Vishal Dixit. His
consistent supervision, constant inspiration and invaluable guidance and suggestions have been
of immense help in carrying out the project work with success.

I extend my heartfelt thanks to my family and friends for their moral support and
encouragement.

Harish Kumar Salame

Semester III

Roll no. 55

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Contents
WHAT IS A CONTRACT? .................................................................................................................... 6
REQUIREMENT OF VALID CONTRACT ...................................................................................... 6
DISCHARGE OF A CONTRACT ......................................................................................................... 7
ORIGIN OF VOLUNTARY REMISSION OF DEBT IN ROMAN.................................................. 7
PERFORMANCE OF A CONTRACT............................................................................................... 8
Discharge through performance .......................................................................................................... 8
Divisible/Severable contracts.............................................................................................................. 9
Acceptance of partial performance ..................................................................................................... 9
ACCEPTANCE OF LESS SUM ...................................................................................................... 10
ACCEPTANCE OF PAYMENT UNDER PROTEST AND ADDITIONAL WORK ................ 10
WAIVER .......................................................................................................................................... 11
CONCLUSION ..................................................................................................................................... 12
REFERENCES ..................................................................................................................................... 13

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INTRODUCTION

Every valid contract creates legal obligation on both the contracting parties and this obligation
continues fill the contract has been actually performed or otherwise discharged. Performances
of the contract is one of the various modes of discharge of the contract and this is the most
natural, desired and usual mode of discharging an obligation.
The term 'performance' means that the parties to the contract have fulfilled or carried out their
respective obligations arising out of the contract. For example, “A” contracts.to sell his book
to “B” for Rs. 50. “A” delivers the book and “B” makes the. Payment, the contract is discharged
by performance.
The term 'discharge of a contract' means that the parties to it are no more liable under the
contract. The most obvious or desirable method of discharge of a contract is to perform it. Just
as a contract is created by means of an agreement, it can be terminated or discharged by mutual
agreement. If the parties to a contract agree to make a fresh contract in place of the original
contract, the original contract is discharged.
A contract may be discharged in any one of the following ways: Actual Anticipatory
1. By performance
2. By mutual agreement
3. By lapse of time
4. By operation of law
5. By impossibility of performance
6. By breach.
In this paper I have focused on only one way discharging of a contract that is by remission
which comes under the head of discharge by performance.

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OBJECTIVES

The following are the object of the project:-

1. Firstly, to study what is meant by accepted part performance?

2. To know the validity of such acceptance.

Research methodology
The method of research of this project is doctrinal as well as descriptive in nature. I have
referred sources on the internet as well as a few books on Indian Contract Act, available in the
university library besides adding my personal views and knowledge of the topic. Books and
other references as guided by the faculty of contract have been primarily helpful in giving this
project a firm structure. Websites, dictionaries, law journals and articles have also been
referred.

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WHAT IS A CONTRACT?

A contract is basically an agreement between two parties creating a legal obligation for both of them to
perform specific acts. Each party is legally bound to perform the specified duties such as rendering a
payment or delivering goods.
In order for the contract to be enforceable, each party must exchange something of value (called
“consideration”).
A contract may be used for various transactions, including the sale of land or goods, or the provision of
services. They may be either oral or written, though courts prefer that agreements be put in writing.

REQUIREMENT OF VALID CONTRACT

In order to create a valid contract, According to Sec.-10 of contract Act,1872 there must be:-
 An Agreement ( offer + acceptance) Sec.-2(e)
 Competent parties (major, sound mind, not otherwise disqualified)
 Free consent
 Lawful Consideration
 Lawful object
 Contract should not be declared void by contract act
In order for an agreement to be binding in a court of law, a contract must contain the following elements:
Mutual Assent: Each party must have a shared understanding regarding what the subject matter of
the contract is. For example, for a delivery contract, both parties must understand that the word “ship”
does not refer to a sea vessel, but rather means “to deliver”.
Offer and Acceptance: One party must make an offer by clearly communicating their intent to be
bound in a contract. Likewise, the other party must render their acceptance in unambiguous terms.
Consideration: This where both parties mutually exchange something of value in order to make the
agreement binding. The consideration may simply be a formality, such as giving $1. Sometimes
contracts can be enforced in a one-sided promise where only one party renders consideration1.

1
See https://www.britannica.com/topic/performance-contract-law accessed on 30th November 2018.

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DISCHARGE OF A CONTRACT

Discharge of a contract implies termination of contractual obligations. This is because when the
parties originally entered into the contract, the rights and duties in terms of contractual
obligations were set up. Consequently when those rights and duties are put out then the contract is said
to have been discharged. Once a contract stands discharged, parties to it are no more liable even though
the obligations under the contract remain incomplete.
A Contract is deemed to be discharged, that is, concluded and no longer binding, in the following
circumstances:
 Discharge by performance.
 Discharge of Contract by Substituted Agreement.
 Discharge by lapse of time.
 Discharge by operation of law.
 Discharge by Impossibility of Performance.
 Discharge by Accord and Satisfaction.
 Discharge by breach.
As the paper is all about remission of a contract we will focus on performance part.

ORIGIN OF VOLUNTARY REMISSION OF DEBT IN ROMAN

The voluntary remission of debt appears to emerged as a fairly common procedure in tenant farming as
early as the late republic2. Later on tax collectors were just as generous towards public as they were
accustomed towards there tenant. The evidence regarding the voluntary debt remission is found in the
letters of Pliny the Younger3. He reduced the rents of his tenants. After that the money lenders started
to give some concession regarding the debt at the time of natural calamities. And sometimes they just
clear the debt if they are too generous or of kind nature.
From there the remission of debt began.

2
Ibid, 245
3
One of the administrators in the court of Emperor Trajan, Roman Empire, see
https://sol.du.ac.in/mod/book/view.php?id=644&chapterid=367

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PERFORMANCE OF A CONTRACT

Performance, in law, act of doing that which is required by a contract. The effect of successful
performance is to discharge the person bound to do the act from any future contractual liability.
Each party to the contract is bound to perform promises according to the stipulated terms. In case of
any controversy as to the meaning of a promise, the courts have usually decided that a person must
perform it as the other party reasonably understood it to be. Thus, a preference for the rights of the one
who is to receive the benefit of the promise is established.

Discharge through performance

A contract becomes discharged through performance where both parties have fully performed
their contractual obligations. If one party does not fully perform the contract this will amount
to a breach of contract and the other party may have a claim for damages unless the contract
has been frustrated. If the non-performance amounts to a repudiatory breach (breach of
condition) the other party will be released from their obligations. Where a contract is one where
the price is payable on completion, then completion is generally required in order to discharge
the contract. This is often expressed in the terms of being a condition precedent. Completion
triggers the requirement of payment: no completion, no payment. This general rule was
established in Cutter v Powell and is obviously capable of causing injustice:
Cutter v Powell4
The claimant's husband agreed by contract to act as a second mate on the ship the 'Governor
Parry' on a return voyage to Jamaica. The voyage was to take eight weeks and he was to be
paid on completion. A term in the contract stated:
"Ten days after the ship 'Governor Parry,' myself master, arrives at Liverpool, I promise to pay
to Mr. T. Cutter the sum of thirty guineas, provided he proceeds, continues and does his duty
as second mate in the said ship from hence to the port of Liverpool. Kingston, July 31st, 1793."
Six weeks into the voyage the claimant's husband died. The claimant sought to claim a sum to
represent the six weeks work undertaken.
Held: The wife's action failed. Payment was on condition that he worked the ship to Liverpool,
since he did not fulfil this condition the widow was entitled to nothing.

The harshness of this rule relating to discharge through performance has been mitigated by the
creation of various exceptions:

4
[1795] EWHC KB J13

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Divisible/Severable contracts

The rule relating to discharge through full performance applies where there exists an entire
contract. Where it is possible to divide a contract into separate parts, eg. if a sum is agreed to
be payable per week or hour, then the courts can award a sum for the separate parts of the
contract which have been completed:

Acceptance of partial performance

This is where one of the parties has performed the contract, but not completely, and the other
side has shown willingness to accept the part performed. Partial performance may occur where
there is shortfall on delivery of goods or where a service is not fully carried out. Where one
party freely agrees to accept partial performance, then a sum is payable for the work completed.
The main focus is on free acceptance:
Sumpter v Hedges5
The claimant agreed to build two houses and stables for the defendant. It was agreed that £565
would be payable on completion. The claimant commenced performance and then ran out of
money and was unable to complete. He had performed just over half of the contract. The
defendant completed the work himself. The claimant sought to recover £333 representing the
value of the work he had completed. He argued that in completing the work himself, the
defendant had thereby accepted partial performance and prevented the claimant from
completing the contract.
Held:
The claimant's action failed. The court held that the defendant had no choice but to accept
partial performance as he was left with a half completed house on his land.
Remission is said to be done where a party to the contract agrees to:
i. Dispense with
ii. Accept a lesser amount or lesser degree of performance for full discharge of a contract
iii. Extends the time of performance
For remission, no consideration is required to be paid by the benefiting party6. Once the party agrees
for remission, it cannot be revoked. However the remission may be conditional.

5
(1898) 1 QB 673
6
See section 63 of the Indian Contract Act, 1872

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ILLUSTRATION
“A” owes “B” 5000 rupees. “A” pays to “B” 1000 rupees, and “B” accepts in satisfaction of the whole
debt, 2000 rupees paid at the time and place at which the 5000 rupees were payable. The whole debt is
discharged.

ACCEPTANCE OF LESS SUM

The acceptance of a less sum of money where more is due, is a good discharge of the whole of the
liability. The supreme court in Kapurchand Godha v. Mir Navab7
The liability was above twenty seven lakhs of rupees. Hyderabad having been taken over, a committee
was appointed to clear the matters. It offered twenty lakhs to the creditor in full satisfaction and he
accepted it afterwards the creditor sued the debtor for the balance.
SC held that the appellant having accepted the payment in full satisfaction of his claim was not entitled
to sue.

ACCEPTANCE OF PAYMENT UNDER PROTEST AND ADDITIONAL WORK

The contractor accepted the amount mentioned in the final bill under protest. The contractor company
had performed additional work on the direction of the department. The court said that the contractor
was entitled to additional amount or by way of damages as per the terms of the agreement. The mere
fact that the contractor had accepted the final bill, it could not be deprived of its right to claim damages
for the additional work which was provable fact8.

7
AIR 1963 SC 250
8
R.L. Kalathia & co. v State of Gujarat

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WAIVER

The party entitled to claim the performance may waive his right by making any default unless
he has reasonable grounds for such default9.
M. Sham Singh V State of Mysore10
M was granted scholarship by the state for higher studies in abroad with a condition that on his
return he would serve the state and state will give him the job within six months of his return.
If M fails to do so he will have to pay the amount spent on him.
M came back to the state and made an application to the state for going back to the University
for the Pursuance of the practical knowledge and experience for the period of one year, state
granted the permission. Later on M joined in the United states, State claimed compensation
and performance of the same.
Court said that nothing is there which shows that state has intention of waiving the rights by
releasing the scholar.

9
See page no. 426 of the book, contract and specific relief by Avatar Singh, 11th ed.
10
AIR 1972 SC 2440

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CONCLUSION

For a contract to be completed the performance of the obligations under the agreement is
required.
Both the parties have to perform their part fully or whole. But in some cases where one of the
parties has performed the contract, but not completely, and the other side has shown willingness
to accept the part performed. Partial performance may occur where there is shortfall on delivery
of goods or where a service is not fully carried out. It amounts in discharge of liabilities of the
other party. There he cannot ask for the remaining performance, as he has already been
discharged from his liabilities.
Hence we can say that the acceptance of partial performance of a contract implies full
satisfaction.

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REFERENCES

WEBSITES REFERRED
1. https://sol.du.ac.in/mod/book/view.php?id=644&chapterid=367
2. http://e-lawresources.co.uk/Discharge-through-performance.php
3. https://accountlearning.com/performance-of-contract-meaning-types-of-
performance/#Partial_Performance

BOOKS REFERRED
1. Contract and Specific Relief
- Avatar Singh, 11th ed. Eastern book Co.
2. Contract – I
-Dr. R. K. Bangia

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