Section 37 of Indian Contract Act, 1872: Obligation of Parties to Contracts
Section 37 states the basic rule of contractual performance: parties must perform, or offer to perform, their respective promises unless performance is dispensed with or excused by the Indian Contract Act, 1872 or another law.
What does Section 37 provide?
Section 37 - Obligation of parties to contracts.
The parties to a contract must either perform, or offer to perform, their respective promises, unless such performance is dispensed with or excused under the provisions of this Act, or of any other law.
Promises bind the representatives of the promisors in case of the death of such promisors before performance, unless a contrary intention appears from the contract.
Meaning and scope of Section 37
Section 37 appears in Chapter IV of the Indian Contract Act, 1872, dealing with performance of contracts. It establishes that a valid contractual promise normally has to be carried out. A promisor may satisfy this obligation either by actual performance or, where legally sufficient, by making a valid offer to perform.
The rule is subject to an important qualification. Performance is not required where it has been lawfully dispensed with or excused under the Contract Act or another applicable law. The provision therefore operates with the other rules governing performance, tender, reciprocal promises, impossibility, remission and discharge.
Performance and offer to perform
Performance means carrying out the promise undertaken under the contract. An offer to perform, commonly described as a tender of performance, is an offer by the promisor to fulfil the contractual obligation. Section 38 deals specifically with the effect of refusal by the promisee to accept a proper offer of performance.
A mere assertion of willingness is not necessarily enough. The legal effect of an offer of performance depends on the statutory requirements applicable to a valid tender, including the requirements stated in Section 38 of the Indian Contract Act, 1872.
Effect of death of a promisor
The second paragraph of Section 37 provides that, when a promisor dies before performance, the promise ordinarily binds the promisor's representatives. This rule does not apply where a contrary intention appears from the contract.
The distinction is especially important where the promise depends upon the personal skill, qualifications, confidence or personal performance of the promisor. A promise capable of being performed through the estate or representatives may survive death, while a promise that is personal in its nature may not.
Illustrations under Section 37
Illustration (a): obligation capable of performance by representatives
A promises to deliver goods to B on a certain day on payment of Rs. 1,000. A dies before that day. A's representatives are bound to deliver the goods to B, and B is bound to pay Rs. 1,000 to A's representatives.
Illustration (b): personal promise
A promises to paint a picture for B by a certain day at a certain price. A dies before that day. Because the promise depends on A's personal performance, the contract cannot be enforced either by A's representatives or by B.
Key legal principles
| Principle | Effect |
|---|---|
| Duty to perform | Each party must ordinarily perform the promises undertaken under the contract. |
| Offer of performance | A legally valid offer to perform may have consequences even if the promisee refuses to accept it; Section 38 governs the statutory requirements and effect. |
| Performance excused or dispensed with | Section 37 itself recognizes exceptions created by the Contract Act or other applicable law. |
| Death of promisor | Representatives are ordinarily bound unless a contrary intention appears from the contract. |
| Personal contracts | Where performance necessarily depends on the promisor personally, the obligation may not be capable of performance by representatives. |
Related provisions of the Indian Contract Act
Section 37 should be read with the provisions that follow it in Chapter IV. Section 38 addresses refusal to accept an offer of performance; Section 39 addresses refusal of a party to perform a promise wholly; and Section 40 concerns the person by whom a promise is to be performed.
Frequently asked questions
What is the main rule under Section 37?
Parties must perform or offer to perform their contractual promises unless performance is legally dispensed with or excused.
Does a contractual promise always end with the death of the promisor?
No. Section 37 states that promises ordinarily bind the representatives of a deceased promisor unless a contrary intention appears from the contract. The nature and terms of the promise remain important.
What happens when the contract requires personal skill?
A promise that necessarily depends on the personal skill or personal performance of the promisor may not be capable of performance by legal representatives. The statutory illustration concerning a promise to paint a picture demonstrates this distinction.