Parties to contract must either perform or offer to perform their respective promises unless performance is dispensed with or excused." Explain.

The principle that "Parties to contract must either perform or offer to perform their respective promises unless performance is dispensed with or excused" is explicitly stated in Section 37 of the Indian Contract Act, 1872. This section lays down the primary duty of parties to a contract. Each party is bound to perform their part of the obligation. If a party fails to perform, an action may lie against them.

1. Must either perform, or offer to perform their respective promises:

   • Performance: This is the fulfilling of the obligations agreed upon in the contract. After due performance, the liability under the contract comes to an end, and the contract is said to be 'discharged by performance'.

   • Offer to perform (Tender of Performance): The promisor must offer to perform their obligation to the promisee. This offer is known as "tender of performance". Section 38 deals with the effect of refusal to accept this offer. If the promisee does not accept a valid offer of performance, the promisor is not responsible for non-performance and does not lose their rights under the contract. The promisor can then sue the promisee for breach of contract. For a tender of performance to be valid, it must be unconditional, made at a proper time and place, and under circumstances giving the promisee a reasonable opportunity to ascertain that the promisor is able and willing to perform the whole of the promise.

2. Unless such performance is dispensed with or excused: Situations where the duty to perform is dispensed with or excused:

   • Dispensing with or remitting performance (Section 63): The promisee (the party who has the right to demand performance) may dispense with or remit the performance wholly or in part. They can also extend the time for performance or accept any other satisfaction instead of the original performance. This can be done without consideration. For example, accepting a lesser sum where more is due can discharge the whole liability. However, accepting performance "under protest" does not discharge the contract.

   • Effect of neglect of promisee (Section 67): If the promisee neglects or refuses to afford the promisor reasonable facilities for the performance of the promise, the promisor is excused for any non-performance caused by such neglect or refusal. An example given is where A contracts to repair B's house, and B neglects or refuses to point out the places needing repair; A is excused for the non-performance. This applies particularly where promises are interdependent and one party requires the cooperation of the other.

   • Impossibility of performance (Doctrine of Frustration - Section 56): An agreement to do an act impossible in itself is void (initial impossibility). If the performance of a contract becomes impossible or unlawful after it is made due to a supervening event which the promisor could not prevent, the contract becomes void. This is the doctrine of frustration. The performance is excused because the changed circumstances make it impossible, and the parties are absolved from further performance as they did not promise to perform an impossibility. Section 56 lays down a positive rule of law on this matter.

Case laws on Impossibility/Frustration:

• Taylor v Caldwell: Where the use of a music hall and gardens was contracted for, but the hall was destroyed by fire before the performance date, the contract was held void due to the perishing of the subject matter without the fault of the promisor. This case is foundational to the idea of impossibility excusing performance.

• Robinson v Davison: A piano player promised to play at a concert but could not due to illness. The court held the defendant (piano player) was not liable, as performance was impossible due to illness.

• Satyabrata Ghose v Mugneeram: The Supreme Court explained that the essential idea behind frustration is the impossibility of performance.

• Discharge by Agreement and Novation (Sections 62-67): Parties can agree to substitute a new contract for the old one, or to rescind or alter the original contract, in which case the original contract need not be performed. This is based on the principle that those who create a thing can also put an end to it.

• Breach of Contract (Section 39): When one party refuses to perform or disables themselves from performing their promise in its entirety, the other party (promisee) may put an end to the contract. This discharge by breach excuses the innocent party from their obligation to perform their part.

• Operation of Law: Contracts can also be discharged by operation of law. An example mentioned is the death of a promisor, though performance is excused only if the contract depends on the personal skill of the promisor (like painting a picture). Bankruptcy or company liquidation can also result in a statutory discharge from contractual obligations.

In summary, while parties to a contract have a fundamental duty under Section 37 to perform or offer to perform their promises, the law provides specific circumstances, detailed in various sections of the Indian Contract Act and supported by judicial interpretation, where this duty is excused or dispensed with, thereby discharging the contract.

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