Reciprocal Promises under the Indian Contract Act, 1872: Everything you need to know (Section 51 to 57) :Lawcirca

Reciprocal Promises under the Indian Contract Act, 1872: Everything you need to know (Section 51 to 57)

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Under the contract act when the proposal is accepted it is known as a promise. The reciprocal promise means promises which form the consideration or a part of it as defined under 2(f) of the Indian Contract Act, 1872. An example of reciprocal promise can be we go to a grocery shop and order some goods here we promise to pay the price of those goods and in return, the shopkeeper promises delivery of those goods on payment this is a reciprocal promise.

In this article, we will discuss Reciprocal promise and its performance in detail.

1. Promisor not bound to perform, unless reciprocal promisee ready and willing to perform (Section 51)

Section 51 states that a promisor is not bound by his promise until and unless the reciprocal promisee that is the person who made the reciprocal promise is willing to perform the promise. If Mr X and Mr Y sign a contract that X will deliver certain goods to Y and the payment will be made in cash on delivery, there is no need on the part of X to deliver goods unless he sees willingness on the side of Y to make payment in cash. 

What will be the consequence of partial default in performance?

This question frequently arises that whether a party loses its right on the failure of performance of a part of the contract. In dealing with such cases it becomes very difficult to ascertain the true intention of the parties. Then we need to see if a particular stipulation goes to the root of the matter, so that failure of a contract by the plaintiff a thing different in substance from what the defendant has stipulated for or whether it merely partially affects it and may be compensated for in damages. 

2. Order of performance of a reciprocal contract (Section 52)

When an order has been prescribed in the performance of reciprocal promises then that order should be followed. If it is not mentioned the reciprocal promises should follow the order which the nature of the transaction requires. In a case Edridge v R.D Sethna it was held that the subsequent conduct cannot help to conclude as in how the promises need to be performed. We can also take an example, if A promises B to renovate his cabin at a fixed price the natural order followed will be A renovating the cabin and then receives payment.

 3. Liability of party preventing the event on which the contract is to take effect (Section 53)

If  X and Y contract that X will do certain work for Y for ten thousand rupees and X is ready to do the same but Y prevents him from doing so the contract becomes voidable at the option of X.

No man can complain of the other not performing the promise when he himself has prevented the party from doing so. The principle is not confined to only direct prevention or the forcible ones. When there is  a contract with the government and the government agrees to provide the contractor with necessary supplies but the contractor demanded more like machines. Here Section 53 of the Indian Contract Act would not be any assistance to the contractor when the government refuses to supply him machines.

4  Effect of default as to that promise which should be performed, in contract consisting of reciprocal promises (Section 54)

When the promises are dependent on each other when one fails to perform the first promise he cannot expect the performance of the reciprocal promise. The person who fails to perform the promise is liable to compensate the other party if any such cost arose due to non-performance of the promise.  An example can be if a man wanted to shift to a flat on rent promises to make the advance payment, the other party makes a reciprocal promise to give the flat after the payment. Due to some reason if the man fails to make the payment he cannot claim the flat as the reciprocal promise was dependant on his promise which he failed to perform. It might also happen that the man had to pay compensation due to the loss suffered by the other party due to non-performance of the contract.

5 Effect of failure to perform at a fixed time, in contract in which time is essential (Section 55)

In any contract when time is the essence failure to perform in the given time leads or entitles the promisee to avoid the contract. When time is not essential to a contract, it can simply not be avoided giving the reason that time for performance has expired.  In such contracts, the promisee has the option to waive the right to void the contract if promisor fails to perform in a reasonable time.

Example

If a father promises his son that he will make the payment for his examination form and there is no date specified in the contract but it is understood that the payment will be made before the examination forms window closes. Here time becomes an essence in the contract and if not followed it might lead to loss to the son.

6 Agreement to do impossible act (Section 56)

When two parties enter into a contract to an impossible act or something that is unlawful it makes the contract void. There can be two aspects to look into this matter first that the subject matter of the promise can be impossible or unlawful  at the time the contract was made and second that the matter became impossible or unlawful subsequently. Let us first discuss the two in detail-

1. When the matter is impossible or unlawful at the time of the contract

If both the parties are aware that the contract they are entering into is impossible or unlawful then the contract becomes void. For example, if Mr A contracts with Mr E that he will make delivery of the order through the waterways to Saudi Arabia in 2 days and then take the payment in cash here the contract becomes void as it is impossible to deliver the consignment through waterways to Saudi Arabia within two days. If both the parties are unaware of this fact then the contract stands void.

If one of the parties to the contract is aware of this impossibility of unlawfulness then this party has to sustain the losses of the other party due to non-performance of the contract.

2. When the subject matter of the contract becomes impossible or unlawful subsequently

This is possible when the contract is entered by the two parties the matter is possible and legal but later on becomes unlawful. In such cases, the contract becomes void from the moment it is declared unlawful.

For example, if john promises to deliver harry marijuana which was legal in their country within five days but after they enter the contract the government over there declares marijuana illegal. Here the contract becomes void and John will not be able to perform his promise.

7 Reciprocal of Legal and Illegal Acts (Section 57)

Section 57 of the Indian Contract Act can only apply to cases where there are two sets of promises made and they are distinct in nature so that if required can be separated. There are two sets of such promises on which is legal and second which is illegal and thus void here the first part is performed while the latter becomes invalid. 

For example, if A and B contract to sell A’s farmhouse situated in Thane, Maharashtra to B for INR 25,00,00 which B will use later on as a dance bar which is illegal in Maharashtra then here the first part of the contract that is the sale of the farmhouse is legal and possible and the next part that is using it as a dance bar is illegal and therefore becomes invalid.

8 Alternative promise, one branch being illegal(Section 58)

We can understand this section with the help of an example if John and Harry contract that John will deliver bread and opium to Harry the delivery of bread is legal and therefore valid and can be enforced but as delivery of opium is illegal it will be held as invalid.


Sunidhi Singh

Author

Sunidhi hails from Symbiosis Law School, NOIDA and spends most of her time researching, reading and debating. Her Interest areas are law and policy. For any clarifications, feedback, and advice, you can reach us at editor@lawcirca.com

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