45. Devolution of joint rights.—
When a person has made a promise to two or more persons jointly,
then, unless a contrary intention appears from the contract, the right to claim performance rests, as
between him and them, with them during their joint lives, and, after the death of any of them, with the
representative of such deceased person jointly with the survivor or survivors, and, after the death of the
last survivor, with the representatives of all jointly.2
Illustration
A, in consideration of 5,000 rupees, lent to him by B and C, promises B and C jointly to repay them that sum with interest
on a day specified. B dies. The right to claim performance rests with B’s representative jointly with C during C’s life, and after
the death of C with the representatives of B and C jointly.
Time and place for performance
46. Time for performance of promise, when no application is to be made and no time is
specified.—Where, by the contract, a promisor is to perform his promise without application by the
promisee, and no time for performance is specified, the engagement must be performed within a
reasonable time.
Explanation.—The question “what is a reasonable time” is, in each particular case, a question of fact.
47.Time and place for performance of promise, where time is specified and no application to be
made.—When a promise is to be performed on a certain day, and the promisor has undertaken to perform
it without application by the promisee, the promisor may perform it at any time during the usual hours of
business on such day and at the place at which the promise ought to be performed.
Illustration
A promises to deliver goods at B’s warehouse on the first January. On that day A brings the goods to B’s warehouse, but
after the usual hour for closing it, and they are not received. A has not performed his promise.
48. Application for performance on certain day to be at proper time and place.—When a
promise is to be performed on a certain day, and the promisor has not undertaken to perform it without
application by the promisee, it is the duty of the promisee to apply for performance at a proper place and
within the usual hours of business.
1. See s. 138, infra.
2. For an Exception to s. 45 in case of Government securities, see the Public Debt Act, 1944 (18 of 1944), s. 8.
23
Explanation.—The question “what is a proper time and place” is, in each particular case, a question
of fact.
49. Place for performance of promise, where no application to be made and no place fixed for
performance.—When a promise is to be performed without application by the promisee, and no place is
fixed for the performance of it, it is the duty of the promisor to apply to the promisee to appoint a
reasonable place for the performance of the promise, and to perform it at such place.
Illustration
A undertakes to deliver a thousand maunds of jute to B on a fixed day. A must apply to B to appoint a reasonable place for
the purpose of receiving it, and must deliver it to him at such place.
50. Performance in manner or at time prescribed or sanctioned by promisee.—The performance
of any promise may be made in any manner, or at any time which the promisee prescribes or sanctions.
Illustrations
(a) B owes A 2,000 rupees. A desires B to pay the amount to A’s account with C, a banker. B, who also banks with C,
orders the amount to be transferred from his account to A’s credit, and this is done by C. Afterwards, and before A knows of the
transfer, C fails. There has been a good payment by B.
(b) A and B are mutually indebted. A and B settle an account by setting off one item against another, and B pays A the
balance found to be due from him upon such settlement. This amounts to a payment by A and B, respectively, of the sums which
they owed to each other.
(c) A owes B 2,000 rupees. B accepts some of A’s goods in reduction of the debt. The delivery of goods operates as a part
payment.
(d) A desires B, who owes him Rs. 100, to send him a note for Rs. 100 by post. The debt is discharged as soon as B puts into
the post a letter containing the note duly addressed to A.
Performance of reciprocal promises
51.Promisor not bound to perform, unless reciprocal promisee ready and willing to
perform.—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.
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.
52.Order of performance of reciprocal promises.—Where the order in which reciprocal promises
are to be performed is expressly fixed by the contract, they shall be performed in that order; and where the
order is not expressly fixed by the contract, they shall be performed in that order which the nature of the
transaction requires.
Illustrations
(a) A and B contract that A shall build a house for B at a fixed price. A’s promise to build the house must be performed
before B’s promise to pay for it.
(b) A and B contract that A shall make over his stock-in-trade to B at a fixed price, and B promises to give security for the
payment of the money. A’s promise need not be performed until the security is given, for the nature of the transaction requires
that A should have security before he delivers up his stock.
24
53. Liability of party preventing event on which the contract is to take effect.—When a contract
contains reciprocal promises, and one party to the contract prevents the other from performing his
promise, the contract becomes voidable at the option of the party so prevented; and he is entitled to
compensation 1from the other party for any loss which he may sustain in consequence of the non-
performance of the contract.
Illustration
A and B contract that B shall execute certain work for A for a thousand rupees. B is ready and willing to execute the work
accordingly, but A prevents him from doing so. The contract is voidable at the option of B; and, if he elects to rescind it, he is
entitled to recover from A compensation for any loss which he has incurred by its non-performance.
54. Effect of default as to that promise which should be first performed, in contract consisting
of reciprocal promises.—When a contract consists of reciprocal promises, such that one of them cannot
be performed, or that its performance cannot be claimed till the other has been performed, and the
promisor of the promise last mentioned fails to perform it, such promisor cannot claim the performance of
the reciprocal promise, and must make compensation to the other party to the contract for any loss which
such other party may sustain by the non-performance of the contract.
Illustrations
(a) A hires B’s ship to take in and convey, from Calcutta to the Mauritius, a cargo to be provided by A, B receiving a certain
freight for its conveyance. A does not provide any cargo for the ship. A cannot claim the performance of B’s promise, and must
make compensation to B for the loss which B sustains by the non-performance of the contract.
(b) A contracts with B to execute certain builder’s work for a fixed price, B supplying the scaffolding and timber necessary
for the work. B refuses to furnish any scaffolding or timber, and the work cannot be executed. A need not execute the work, and
B is bound to make compensation to A for any loss caused to him by the non-performance of the contract.
(c) A contracts with B to deliver to him, at a specified price, certain merchandise on board a ship which cannot arrive for a
month, and B engages to pay for the merchandise within a week from the date of the contract. B does not pay within the week.
A’s promise to deliver need not be performed, and B must make compensation.
(d) A promises B to sell him one hundred bales of merchandise, to be delivered next day, and B promises A to pay for them
within a month. A does not deliver according to his promise. B’s promise to pay need not be performed, and A must make
compensation.
55. Effect of failure to perform at fixed time, in contract in which time is essential.—When a
party to a contract promises to do a certain thing at or before a specified time, or certain things at or
before specified times, and fails to do any such thing at or before the specified time, the contract, or so
much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of
the parties was that time should be of the essence of the contract.
Effect of such failure when time is not essential.—If it was not the intention of the parties that time
should be of the essence of the contract, the contract does not become voidable by the failure to do such
thing at or before the specified time; but the promisee is entitled to compensation from the promisor for
any loss occasioned to him by such failure.
Effect of acceptance of performance at time other than that agreed upon.—If, in case of a
contract voidable on account of the promisor’s failure to perform his promise at the time agreed, the
promisee accepts performance of such promise at any time other than that agreed, the promisee cannot
claim compensation for any loss occasioned by the non-performance of the promise at the time agreed,
unless, at the time of such acceptance, he gives notice to the promisor of his intention to do so.2
STATE AMENDMENT
Uttar Pradesh
Amendment of section 55.—In section 55 of the Principal Act, in the third paragraph, for the words
“unless at the time of such acceptance he gives notice to the promiser of his intention to do so”, the words
“where at the time of such acceptance he has waived his right to do so” shall be substituted.”
[Vide Uttar Pradesh 57 of 1976, s. 26]
1. See s. 73, infra.
2. C.f. ss. 62 and 63, infra.
25
56. Agreement to do impossible act.—An agreement to do an act impossible in itself is void.
Contract to do an act afterwards becoming impossible or unlawful.—A contract to do an act
which, after the contract is made, becomes impossible, or, by reason of some event which the promisor
could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.1
Compensation for loss through non-performance of act known to be impossible or unlawful.—
Where one person has promised to do something which he knew, or, with reasonable diligence, might
have known, and which the promisee did not know, to be impossible or unlawful, such promisor must
make compensation to such promisee for any loss which such promisee sustains through the non-
performance of the promise.
Illustrations
(a) A agrees with B to discover treasure by magic. The agreement is void.
(b) A and B contract to marry each other. Before the time fixed for the marriage, A goes mad. The contract becomes void.
(c) A contracts to marry B, being already married to C, and being forbidden by the law to which he is subject to practise
polygamy, A must make compensation to B for the loss caused to her by the non-performance of his promise.
(d) A contracts to take in cargo for B at a foreign port. A’s Government afterwards declares war against the country in which
the port is situated. The contract becomes void when war is declared.
(e) A contracts to act at a theatre for six months in consideration of a sum paid in advance by B. On several occasions A is
too ill to act. The contract to act on those occasions becomes void.
57.Reciprocal promise to do things legal, and also other things illegal.—Where persons
reciprocally promise, firstly, to do certain things which are legal, and, secondly, under specified
circumstances, to do certain other things which are illegal, the first set of promises is a contract, but the
second is a void agreement.
Illustration
A and B agree that A shall sell B a house for 10,000 rupees, but that, if B uses it as a gambling house, he shall pay A 50,000
rupees for it.
The first set of reciprocal promises, namely, to sell the house and to pay 10,000 rupees for it, is a contract.
The second set is for an unlawful object, namely, that B may use the house as a gambling house, and is a void agreement.
58. Alternative promise, one branch being illegal.—In the case of an alternative promise, one
branch of which is legal and the other illegal, the legal branch alone can be enforced.
Illustration
A and B agree that A shall pay B 1,000 rupees, for which B shall afterwards deliver to A either rice or smuggled opium.
This is a valid contract to deliver rice, and a void agreement as to the opium.
Appropriation of payments
59.Application of payment where debt to be discharged is indicated.—Where a debtor, owing
several distinct debts to one person, makes a payment to him, either with express intimation, or under
circumstances implying, that the payment is to be applied to the discharge of some particular debt, the
payment, if accepted, must be applied accordingly.
1. See s. 65, infra.
26
Illustrations
(a) A owes B, among other debts, 1,000 rupees upon a promissory note which falls due on the first June. He owes B no other debt of that
amount. On the first June, A pays to B 1,000 rupees. The payment is to be applied to the discharge of the promissory note.
(b) A owes to B, among other debts, the sum of 567 rupees. B writes to A and demands payment of this sum. A sends to B 567 rupees. This
payment is to be applied to the discharge of the debt of which B had demanded payment.
60. Application of payment where debt to be discharged is not indicated.—Where the debtor has
omitted to intimate and there are no other circumstances indicating to which debt the payment is to be
applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from
the debtor, whether its recovery is or is not barred by the law in force for the time being as to the
limitation of suits.
61. Application of payment where neither party appropriates.—Where neither party makes any
appropriation, the payment shall be applied in discharge of the debts in order of time, whether they are or
are not barred by the law in force for the time being as to the limitation of suits. If the debts are of equal
standing, the payment shall be applied in discharge of each proportionably.
Contracts which need not be performed
62. Effect of novation, rescission, and alteration of contract.—If the parties to a contract agree to
substitute a new contract for it, or to rescind or alter it, the original contract, need not be performed.
Illustrations
(a) A owes money to B under a contract. It is agreed between A, B and C that B shall thenceforth accept C as his debtor, instead of A. The
old debt of A to B is at an end, and a new debt from C to B has been contracted.
(b) A owes B 10,000 rupees. A enters into an arrangement with B and gives B a mortgage of his (A’s) estate for 5,000 rupees in place of the
debt of 10,000 rupees. This is a new contract and extinguishes the old.
(c) A owes B 1,000 rupees under a contract. B owes C 1,000 rupees B orders A to credit C with 1,000 rupees in his books, but C does not
assent to the arrangement. B still owes C 1,000 rupees, and no new contract has been entered into.
63. Promisee may dispense with or remit performance of promisee.—Every promisee may
dispense with or remit, wholly or in part, the performance of the promisee made to him, or may extend the
time for such performance1,or may accept instead of it any satisfaction which he thinks fit.
Illustrations
(a) A promises to paint a picture for B. B afterwards forbids him to do so. A is no longer bound to perform the promise.
(b) A owes B 5,000 rupees. A pays to B, and B accepts, in satisfaction of the whole debt, 2,000 rupees paid at the time and place at which
the 5,000 rupees were payable. The whole debt is discharged.
(c) A owes B 5,000 rupees. C pays to B 1,000 rupees, and B accepts them, in satisfaction of his claim on A. This payment is a discharge of
the whole claim2.
(d) A owes B, under. a contract, a sum of money, the amount of which has not been ascertained. A, without ascertaining the amount, gives
to B, and B, in satisfaction thereof, accepts, the sum of 2,000 rupees. This is a discharge of the whole debt, whatever may be its amount.
(e) A owes B 2,000 rupees, and is also indebted to other creditors. A makes an arrangement with his creditors, including B, to pay them a
3
[composition] of eight annas in the rupee upon their respective demands. Payment to B of 1,000 rupees is a discharge of B’s demand.
64. Consequences of rescission of voidable contract.—When a person at whose option a contract is
voidable rescinds it, the other party thereto need not perform any promise therein contained in which he is
promisor. The party rescinding a voidable contract shall, if he have received any benefit thereunder from
another party to such contract, restore such benefit, so far as may be, to the person from whom it was
received.4
1. But see s. 135, infra.
2. See s. 41, supra.
3. Subs. by Act 12 of 1891, s. 2 and the Second Schedule, Pt. I, for “compensation”.
4. See s. 75, infra.
27
65. Obligation of person who has received advantage under void agreement, or contract that
becomes void.—When an agreement is discovered to be void, or when a contract becomes void, any
person who has received any advantage under such agreement or contract is bound to restore it, or to
make compensation for it to the person from whom he received it.
Illustrations
(a) A pays B 1,000 rupees in consideration of B’s promising to marry C, A’s daughter. C is dead at the time of the promise.
The agreement is void, but B must repay A the 1,000 rupees.
(b) A contracts with B to deliver to him 250 maunds of rice before the first of May. A delivers 130 maunds only before that
day, and none after. B retains the 130 maunds after the first of May. He is bound to pay A for them.
(c) A, a singer, contracts with B, the manager of a theatre, to sing at his theatre for two nights in every week during the next
two months, and B engages to pay her a hundred rupees for each night’s performance. On the sixth night, A wilfully absents
herself from the theatre, and B, in consequence, rescinds the contract. B must pay A for the five nights on which she had sung.
(d) A contracts to sing for B at a concert for 1,000 rupees, which are paid in advance. A is too ill to sing. A is not bound to
make compensation to B for the loss of the profits which B would have made if A had been able to sing, but must refund to B the
1,000 rupees paid in advance.
66. Mode of communicating or revoking rescission of voidable contract.—The rescission of a
voidable contract may be communicated or revoked in the same manner, and subject to the same rules, as
apply to the communication or revocation of a proposal1.
67. Effect of neglect of promisee to afford promisor reasonable facilities for performance.—If
any promisee neglects or refuses to afford the promisor reasonable facilities for the performance of his
promise, the promisor is excused by such neglect or refusal as to any non-performance caused thereby.
Illustration
A contracts with B to repair B’s house.
B neglects or refuses to point out to A the places in which his house requires repair.
A is excused for the non-performance of the contract if it is caused by such neglector refusal.
CHAPTER V
OF CERTAIN RELATIONS RESEMBLING THOSE CREATED BY CONTRACT
68. Claim for necessaries supplied to person incapable of contracting, or on his account.—If a
person, incapable of entering into a contract, or any one whom he is legally bound to support, is supplied
by another person with necessaries suited to his condition in life, the person who has furnished such
supplies is entitled to be reimbursed from the property of such incapable person.2
Illustrations
(a) A supplies B, a lunatic, with necessaries suitable to his condition in life. A is entitled to be reimbursed from B’s
property.
(b) A supplies the wife and children of B, a lunatic, with necessaries suitable to their condition in life. A is entitled to be
reimbursed from B’s property.
69.Reimbursement of person paying money due by another, in payment of which he is
interested.—A person who is interested in the payment of money which another is bound by law to pay,
and who therefore pays it, is entitled to be reimbursed by the other.
1. See ss. 3 and 5, supra.
2. The property of a Government ward in Madhya Pradesh is not liable under this section, see the C.P. Court of Wards Act, 1899
(24 of 1899), s. 31
(1).
28
Illustration
B holds land in Bengal, on a lease granted by A, the zamindar. The revenue payable by A to the Government being in arrear,
his land is advertised for sale by the Government. Under the revenue law, the consequence of such sale will be the annulment of
B’s lease. B, to prevent the sale and the consequent annulment of his own lease, pays to the Government the sum due from A. A
is bound to make good to B the amount so paid.
70.Obligation of person enjoying benefit of non-gratuitous act.—Where a person lawfully does
anything for another person, or delivers anything to him, not intending to do so gratuitously, and such
other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect
of, or to restore, the thing so done or delivered1.
Illustrations
(a) A, a tradesman, leaves goods at B’s house by mistake. B treats the goods as his own. He is bound to pay A for them.
(b) A saves B’s property from fire. A is not entitled to compensation from B, if the circumstances show that he intended to
act gratuitously.
71.Responsibility of finder of goods.—A person who finds goods belonging to another, and takes
them into his custody, is subject to the same responsibility as a bailee2.
72. Liability of person to whom money is paid, or thing delivered, by mistake or under
coercion.—A person to whom money has been paid, or anything delivered, by mistake or under coercion,
must repay or return it.
Illustrations
(a)A and B jointly owe 100 rupees to C, A alone pays the amount to C, and B, not knowing this fact, pays 100 rupees over
again to C. C is bound to repay the amount to B.
(b)A railway company refuses to deliver up certain goods to the consignee, except upon the payment of an illegal charge for
carriage. The consignee pays the sum charged in order to obtain the goods. He is entitled to recover so much of the charge as was
illegally excessive.
CHAPTER VI
OF THE CONSEQUENCES OF BREACH OF CONTRACT
73.Compensation for loss or damage caused by breach of contract.—When a contract has been
broken, the party who suffers by such breach is entitled to receive, from the party who has broken the
contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual
course of things from such breach, or which the parties knew, when they made the contract, to be likely to
result from the breach of it.
Such compensation is not to be given for any remote and indirect loss or damage sustained by reason
of the breach.
Compensation for failure to discharge obligation resembling those created by contract.—When
an obligation resembling those created by contract has been incurred and has not been discharged, any
person injured by the failure to discharge it is entitled to receive the same compensation from the party in
default, as if such person had contracted to discharge it and had broken his contract.
Explanation.—In estimating the loss or damage arising from a breach of contract, the means which
existed of remedying the inconvenience caused by the non-performance of the contract must be taken into
account.
1. As to suits by minors under s. 70 in Presidency Small Cause Courts, see the Presidency Small Cause Courts Act, 1882
(15 of 1882), s. 32.
2. See ss. 151 and 152, infra.
29
Illustrations
(a)A contracts to sell and deliver 50 maunds of saltpetre to B, at a certain price to be paid on delivery. A breaks his promise.
B is entitled to receive from A, by way of compensation, the sum, if any, by which the contract price falls short of the price for
which B might have obtained 50 maunds of saltpetre of like quality at the time when the saltpetre ought to have been delivered.
(b)A hires B’s ship to go to Bombay, and there take on board, on the first of January, a cargo, which A is to provide, and to
bring it to Calcutta, the freight to be paid when earned. B’s ship does not go to Bombay, but A has opportunities of procuring
suitable conveyance for the cargo upon terms as advantageous as those on which he had chartered the ship. A avails himself of
those opportunities, but is put to trouble and expense in doing so. A is entitled to receive compensation from B in respect of such
trouble and expense.
(c)A contracts to buy of B, at a stated price, 50 maunds of rice, no time being fixed for delivery. A afterwards informs B that
he will not accept the rice if tendered to him. B is entitled to receive from A, by way of compensation, the amount, if any, by
which the contract price exceeds that which B can obtain for the rice at the time when A informs B that he will not accept it.
(d) A contracts to buy B’s ship for 60,000 rupees, but breaks his promise. A must pay to B, by way of compensation, the
excess, if any, of the contract price over the price which B can obtain for the ship at the time of the breach of promise.
(e) A, the owner of a boat, contracts with B to take a cargo of jute to Mirzapur, for sale at that place, starting on a specified
day. The boat, owing to some avoidable cause, does not start at the time appointed, whereby the arrival of the cargo at Mirzapur
is delayed beyond the time when it would have arrived if the boat had sailed according to the contract. After that date, and before
the arrival of the cargo, the price of jute falls. The measure of the compensation payable to B by A is the difference between the
price which B could have obtained for the cargo at Mirzapur at the time when it would have arrived if forwarded in due course,
and its market price at the time when it actually arrived.
(f) A contracts to repair B’s house in a certain manner, and receives payment in advance. A repairs the house, but not
according to contract. B is entitled to recover from A the cost of making the repairs conform to the contract.
(g) A contracts to let his ship to B for a year, from the first of January, for a certain price. Freights rise, and, on the first of
January, the hire obtainable for the ship is higher than the contract price. A breaks his promise. He must pay to B, by way of
compensation, a sum equal to the difference between the contract price and the price for which B could hire a similar ship for a
year on and from the first of January.
(h) A contracts to supply B with a certain quantity of iron at a fixed price, being a higher price than that for which A could
procure and deliver the iron. B wrongfully refuses to receive the iron. B must pay to A, by way of compensation, the difference
between the contract price of the iron and the sum for which A could have obtained and delivered it.
(i) A delivers to B, a common carrier, a machine, to be conveyed, without delay, to A’s mill informing B that his mill is
stopped for want of the machine. B unreasonably delays the delivery of the machine, and A, in consequence, loses a profitable
contract with the Government. A is entitled to receive from B, by way of compensation, the average amount of profit which
would have been made by the working of the mill during the time that delivery of it was delayed, but not the loss sustained
through the loss of the Government contract.
(j) A, having contracted with B to supply B with 1,000 tons of iron at 100 rupees a ton, to be delivered at a stated time,
contracts with C for the purchase of 1,000 tons of iron at 80 rupees a ton, telling C that he does so for the purpose of performing
his contract with B. C fails to perform his contract with A, who cannot procure other iron, and B, in consequence, rescinds the
contract. C must pay to A 20,000 rupees, being the profit which A would have made by the performance of his contract with B.
(k) A contracts with B to make and deliver to B, by a fixed day, for a specified price, a certain piece of machinery. A does
not deliver the piece of machinery at the time specified, and in consequence of this, B is obliged to procure another at a higher
price than that which he was to have paid to A, and is prevented from performing a contract which B had made with a third
person at the time of his contract with A (but which had not been then communicated to A), and is compelled to make
compensation for breach of that contract. A must pay to B, by way of compensation, the difference between the contract price of
the piece of machinery and the sum paid by B for another, but not the sum paid by B to the third person by way of compensation.
(l)A, a builder, contracts to erect and finish a house by the first of January, in order that B may give possession of it at that
time to C, to whom B has contracted to let it. A is informed of the contract between B and C. A builds the house so badly that,
before the first of January, it falls down and has to be re-built by B, who, in consequence, loses the rent which he was to have
received from C, and is obliged to make compensation to C for the breach of his contract. A must make
