Skip to main content

Performance of Contractual Obligation

Performance of Contractual Obligation

A. Pre-existing contract with promisor

Secondly, compliance with legal obligation imposed by a contract with the promisor can be no consideration for a promise. An illustration is supplied by the facts of Ramchandra v Kalu Raju: 

The plaintiff accepted a Vakalatnama from the defendant to act for him in a certain suit on receiving his usual fee. Subsequently the defendant agreed to pay him a certain sum as a special reward (inam), if the suit was decided in his favour. The suit was decided in favour of the defendant, who, however, did not pay the amount. The plaintiff, therefore, brought the present suit against him. 

In a Canadian case, a contractor was carrying out construction work for the completion of which the plaintiff was to supply steel at a fixed price. The plaintiff then found out that the steel prices were rising and, therefore, asked the contractor for an upward revision of the price for future supplies. The contractor orally accepted the revision and also accepted deliveries against invoices reflecting the increased price. The contractor, however, did not pay and the supplier sued for the difference. It was held that the price revision being without consideration, the contractor was not bound. The fact that he continued to accept supplies without repudiating invoices did not create any promissory Estoppel against him.

Promise to pay less than the amount due

On the same principle, a promise to pay less than what is due under a contract cannot be regarded as a consideration. 

Position under Indian Contract act different

In India, section 63 of the Indian Contract act clearly provides that “Every promisee may dispense with or remit, wholly or in part, the performance of the promise made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit.” There was a development-agreement between an Improvement Trust and a land owner. A clause in the agreement provided that the owner is to transfer the plot earmarked for a primary school to the Trust free of cost. It was held to be not void for being without consideration or being opposed to public policy. The land owner had under the agreement derived huge benefit by getting his land freed from acquisition and also getting permission to develop the land and put it to commercial use. 

B. Pre-existing contract with third party

Where a person has contracted to do an act and a third party promises to pay him a sum of money if he would go ahead with the performance, is there a consideration for the promise? A situation like this arose in Shadwell v Shadwell. 

The plaintiff was already engaged to be married to a girl, named Ellen Nicholl. His uncle, the defendant, sent him the following letter : ‘I am glad to hear of your intended marriage with Ellen Nicholl ; and, as I promised to assist you at starting, I am happy to tell you that I will pay to you $ 150 yearly during my life, and until your annual income derived from your profession of a Chancery barrister shall amount to 600 guineas. ’

The question was what the consideration for the uncle’s promise was. The court found sufficient consideration to sustain the promise.

Labels:

Comments

Post a Comment

Popular posts from this blog

Concept of constitutionalism

  Concept of constitutionalism Who Started Constitutionalism? John Locke - The English Bill of Rights is a foundational constitutional document that helped inspire the American Bill of Rights. Political theorist  John Locke  played a huge role in cementing the philosophy of constitutionalism.  Constitution is a written law which describes the structure of Government, the rules according to which the Govt. must work and the boundaries within which the Govt. must work. Constitutionalism   can be defined as the doctrine that governs the legitimacy of government action, and it implies something far more important than the idea of legality that requires official conduct to be in accordance with pre-fixed legal rules. Constitution constitution is the document that contains the basic and fundamental law of the nation, setting out the organization of the government and the principles of the society. Basic norm (or law) of the state; System of integration and organi...
Post a Comment
Read more

business tips

1. Have a clear vision for your business and strive to achieve it. 2. Hire great people and give them ownership in the company. 3. Provide excellent customer service. 4. Establish yourself as an expert in your field. 5. Develop relationships with key suppliers, customers, and partners. 6. Keep track of your finances and invest in marketing and innovation. 7. Utilize digital platforms to reach a larger audience. 8. Take calculated risks and back yourself. 9. Continuously strive to improve your products and services. 10. Make customer satisfaction your priority.
Post a Comment
Read more

Effects of Non-Registration

 Effects of Non-Registration The Companies Act, 2013 evidently highlights that the main essential for any organization to turn into a company is to get itself registered. A company cannot come into existence until it gets registered. But no such obligation has been imposed for firms by the Indian Partnership Act, 1932. If a firm is not registered it does not cease to be called as a firm, it still exists in the eyes law. Certainly, such a big advantage is not absolute but is subjected to a lot of limitations which we will study further. Non-registration of a firm simply means that the business skips the formalities of incorporation and ceases to exist in the eyes of the law. section 58 of the Indian Partnership Act, 1932 deals with the procedure of incorporation. Likewise, the meaning of non-registration is the exact opposite of registration, meaning when a firm does not go through the procedure of incorporation or start carrying on activities without getting registered. Effects of ...
Post a Comment
Read more