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A. What are rules regarding performance of contract? Is the time important for performance?
B. Explain the Clayton’s rule of appropriation?
Answer
Once a valid agreement is constituted it calls for the performance of the contract. Which means carrying out the legal obligations undertaken by the parties thereto.
Who should perform the contract?
1. Personal performance
In case involving skills, tastes etc.the promisor must himself perform the agreement. The court will enforce the contract according to the intention of the parties.
2. Performance by representatives
In all other cases the promisor or his representatives may employ a suitable person (competent enough) to perform the contract.
3. Effect of a performance by third person:
When a promise accept the performance by third person, he cannot afterwards enforce it against the promisor (U/s 41)
4. Death of the promisor
Contracts involving person skills or volition, the legal representatives of a deceased promisor are bound to perform the contract. Upon failure to do so they will be liable for breach of contract .but the liability of legal representatives is limited to the assets obtained from the deceased. They are not personally liable.
5. Performance by legal representatives
The legal representatives can enforce performance of the contract upon the other party or parties or their legal representatives.
Time is very important. Rules regarding Time and Place of performance of a contract:
The time and place of performance are matters to determined by agreement between the parties to the contact. U/ s 46-50, certain general rules have been laid down regarding the same. They are as follows:
1) Where time is not specified
The performance must be within a reasonable time, if no specific time is mentioned in the contract, without application by the promisee.
2) Where time is specified
The promisor may perform the contact at any time during the usual hours of business on such day and at such place at which the promisor is obliged to perform it, if a promisor has agreed to perform it on particular day without application by the promisee (u/s 47)
3) On application by promisee for performance
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 promisee to apply for performance at a proper place and within usual hours of business (u/s 48).
4) Without application by the promisee
When promisee is to be performed without application by the promisee and no place is fixed for the performance of it, it is duty of the promisee to appoint a reasonable place for the performance of the promise, and to perform it at such place (sec 49).
5) Performance sanctioned by promisee
The performance of the promise may be made in any manner or at any time, which the promise prescribes or sanctions.
6) Time as essence of the contact
The contract becomes voidable at the option of promisee, if the parties had intended that time shall be of essence to the contract.
B) Law of appropriation (Clayton’s rule)
Whenever a party to the contract, who is obliged to make payment to the other, tenders the payment, it has to be duly appropriated to the contract. The rules regarding such an appropriation are laid down u/s 59-61, vis-à-vis Clayton’s case. They are as follows:
1) The primary right of appropriation rests with debtor, where the debtors owes several distinct debts to one person and makes a payment to him either with express intimation to under circumstances implying that the payment is to be applied to the discharge of the particular debt, the payment (in accepted) must be applied accordingly.
Illustration
i. A owes B two debts viz: rs. 1000/- and 5000/- he makes a payment of Rs. 500/- indicating how this amount is to be appropriated, then B is bound to appropriate that amount accordingly and that he (B) cannot have any independent choice. Where an intimation regarding appropriation is given in an implied style under circumstances suggesting that the payments has to applied in a particular manner, the creditors must so apply it according.
ii. A owes B three distinct debts amounting to Rs. 2000/- . Rs-5000/-and 10000/-out of which Rs. 5000/- fell due for payment on June last. He remits Rs. 5000/-on June 1st without making any express appropriation. This would be applied, if accepted by B towards Rs. 5000/- falling due in that since circumstances suggest so taking into account the relevant factors viz: amount and due date.
However this rule does not apply when there is only debt payable by installments, where the debtors has no choice to apply his payment to particular installment. (Fazal Hussein v/s Jiwan Ali).
2) U/s 60, where a debtor has not made his own appropriation, the creditors may apply it at his own discretion to any lawful debts, including time barred ones, if any. Thus on failure of debtors to intimate appropriation of payment the right devolves upon the creditor provided the circumstances also do not suggest anything in this respect. However, the appropriation by creditor will not be final unless it has been communicated to the debtor. Further after such communication, the creditor can not alter the appropriation since made by him.
Illustration
A owes two debts to B of Rs. 10000/- & 15000/- the former one has gone time barred. Thereafter A remits Rs. 12000/- to B without making any appropriation B can apply Rs. 10000/- to the former one though time- barred and the balance of Rs. 2000/- to the latter under advice to a. This is perfectly in order once communicated by B to A. further B is entitled to change his appropriation before it is communicated to A.
The creditor however cannot appropriate any payment made by the debtor to an illegal or void debt, though he can do so to any time barred debts. (Bitri Ram v/s Kanji Singh). The same principle applied to appropriation to payment towards interest also (Malik v/s Rahim).
3) Where neither the debtor not the creditors makes any appropriation, the payment shall be applied u/s 61 in the following order:
i. If the debts were on different dates, the payment shall be applied in discharge of the debts in order of time of taking loans. Whether they are barred by the Law of Limitation or not. In other words, the loan taken first will be discharged first, and then the second loan will be satisfied and so on.
ii. In the debts were taken on the same day, the payment will be applied proportionately in discharge of each debt.
B. Explain the Clayton’s rule of appropriation?
Answer
Once a valid agreement is constituted it calls for the performance of the contract. Which means carrying out the legal obligations undertaken by the parties thereto.
Who should perform the contract?
1. Personal performance
In case involving skills, tastes etc.the promisor must himself perform the agreement. The court will enforce the contract according to the intention of the parties.
2. Performance by representatives
In all other cases the promisor or his representatives may employ a suitable person (competent enough) to perform the contract.
3. Effect of a performance by third person:
When a promise accept the performance by third person, he cannot afterwards enforce it against the promisor (U/s 41)
4. Death of the promisor
Contracts involving person skills or volition, the legal representatives of a deceased promisor are bound to perform the contract. Upon failure to do so they will be liable for breach of contract .but the liability of legal representatives is limited to the assets obtained from the deceased. They are not personally liable.
5. Performance by legal representatives
The legal representatives can enforce performance of the contract upon the other party or parties or their legal representatives.
Time is very important. Rules regarding Time and Place of performance of a contract:
The time and place of performance are matters to determined by agreement between the parties to the contact. U/ s 46-50, certain general rules have been laid down regarding the same. They are as follows:
1) Where time is not specified
The performance must be within a reasonable time, if no specific time is mentioned in the contract, without application by the promisee.
2) Where time is specified
The promisor may perform the contact at any time during the usual hours of business on such day and at such place at which the promisor is obliged to perform it, if a promisor has agreed to perform it on particular day without application by the promisee (u/s 47)
3) On application by promisee for performance
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 promisee to apply for performance at a proper place and within usual hours of business (u/s 48).
4) Without application by the promisee
When promisee is to be performed without application by the promisee and no place is fixed for the performance of it, it is duty of the promisee to appoint a reasonable place for the performance of the promise, and to perform it at such place (sec 49).
5) Performance sanctioned by promisee
The performance of the promise may be made in any manner or at any time, which the promise prescribes or sanctions.
6) Time as essence of the contact
The contract becomes voidable at the option of promisee, if the parties had intended that time shall be of essence to the contract.
B) Law of appropriation (Clayton’s rule)
Whenever a party to the contract, who is obliged to make payment to the other, tenders the payment, it has to be duly appropriated to the contract. The rules regarding such an appropriation are laid down u/s 59-61, vis-à-vis Clayton’s case. They are as follows:
1) The primary right of appropriation rests with debtor, where the debtors owes several distinct debts to one person and makes a payment to him either with express intimation to under circumstances implying that the payment is to be applied to the discharge of the particular debt, the payment (in accepted) must be applied accordingly.
Illustration
i. A owes B two debts viz: rs. 1000/- and 5000/- he makes a payment of Rs. 500/- indicating how this amount is to be appropriated, then B is bound to appropriate that amount accordingly and that he (B) cannot have any independent choice. Where an intimation regarding appropriation is given in an implied style under circumstances suggesting that the payments has to applied in a particular manner, the creditors must so apply it according.
ii. A owes B three distinct debts amounting to Rs. 2000/- . Rs-5000/-and 10000/-out of which Rs. 5000/- fell due for payment on June last. He remits Rs. 5000/-on June 1st without making any express appropriation. This would be applied, if accepted by B towards Rs. 5000/- falling due in that since circumstances suggest so taking into account the relevant factors viz: amount and due date.
However this rule does not apply when there is only debt payable by installments, where the debtors has no choice to apply his payment to particular installment. (Fazal Hussein v/s Jiwan Ali).
2) U/s 60, where a debtor has not made his own appropriation, the creditors may apply it at his own discretion to any lawful debts, including time barred ones, if any. Thus on failure of debtors to intimate appropriation of payment the right devolves upon the creditor provided the circumstances also do not suggest anything in this respect. However, the appropriation by creditor will not be final unless it has been communicated to the debtor. Further after such communication, the creditor can not alter the appropriation since made by him.
Illustration
A owes two debts to B of Rs. 10000/- & 15000/- the former one has gone time barred. Thereafter A remits Rs. 12000/- to B without making any appropriation B can apply Rs. 10000/- to the former one though time- barred and the balance of Rs. 2000/- to the latter under advice to a. This is perfectly in order once communicated by B to A. further B is entitled to change his appropriation before it is communicated to A.
The creditor however cannot appropriate any payment made by the debtor to an illegal or void debt, though he can do so to any time barred debts. (Bitri Ram v/s Kanji Singh). The same principle applied to appropriation to payment towards interest also (Malik v/s Rahim).
3) Where neither the debtor not the creditors makes any appropriation, the payment shall be applied u/s 61 in the following order:
i. If the debts were on different dates, the payment shall be applied in discharge of the debts in order of time of taking loans. Whether they are barred by the Law of Limitation or not. In other words, the loan taken first will be discharged first, and then the second loan will be satisfied and so on.
ii. In the debts were taken on the same day, the payment will be applied proportionately in discharge of each debt.