Fundamentals of Business Laws and Business Communication · Performance of Contracts

Obligation of Parties to Perform Contracts under Section 37

Updated 10 October 2026 · Fact-checked

Under Section 37 of the Indian Contract Act, 1872, parties to a contract must either perform their promises or offer to perform them, unless performance is dispensed with or excused under the Act or any other law. If a promisor dies, the promises bind his legal representatives, unless the contract shows a contrary intention.

Understand Obligation of Parties to Perform Contracts (Section 37)

A contract creates promises. A promise has no value if nobody has to keep it. Section 37 states the basic rule of performance: each party must perform what he promised, or at least offer to perform it.

Performance means doing what the contract requires, such as delivering goods or paying money. An offer to perform is also called tender. It happens when the promisor is ready and willing and actually offers to do his part, but the other side refuses to accept. A valid tender protects the promisor from being blamed for non-performance.

The duty is not absolute. Performance can be dispensed with (for example, the parties agree to cancel or change the contract, or the promisee waives it) or excused by law (for example, the contract becomes impossible, or it is void). In such cases the promisor is released and cannot be sued for not performing.

The second rule deals with death. Promises bind the legal representatives of the promisor, such as executors or heirs who take the estate, if the contract does not show a contrary intention. But their liability is limited to the property of the deceased they receive. They are not personally liable beyond it.

A contract involving personal skill or personal confidence is different. Its nature implies a contrary intention, because only that person could do the work. So under Section 37 the legal representatives are not bound. For example, a singer who dies before a concert cannot have the performance done by his heirs. A contract to pay money or deliver goods can be carried out by the estate.

Key formulas to remember

Basic rule of Section 37: Each party must perform OR offer to perform his promise; Applies unless performance is dispensed with or excused under the Contract Act or any other law.
Excuses from performance: Dispensed with (by agreement or waiver) OR excused by law; Examples: novation, rescission, remission, impossibility, void contract.
Legal representatives: Promise binds promisor + his legal representatives, unless a contrary intention appears in the contract; Liability is limited to the value of the estate received. In a contract of personal skill, the nature of the contract implies a contrary intention, so the legal representatives are not bound.
Tender: Valid offer to perform = unconditional + at proper time and place + (where goods are to be delivered) a reasonable opportunity for the promisee to see that the thing offered is the thing promised; A valid tender that is refused saves the promisor from being responsible for non-performance and from losing his rights under the contract (Section 38). The inspection condition applies only to delivery of goods, not to tender of money.

How to solve Obligation of Parties to Perform Contracts (Section 37) questions

Use this method for any question on Section 37 or on who must perform a contract.

1Identify the contract and the promise that is said to be unperformed.
2Check whether the contract is valid. A void agreement creates no duty to perform.
3Ask whether the promisor performed or made a valid offer to perform (tender).
4Check for dispensation: did the parties agree to cancel, change or waive performance?
5Check for excuse by law, such as impossibility or a supervening illegality.
6If the promisor has died, ask whether the contract needs personal skill. If not, the legal representatives are bound, limited to the estate.
7Pick the option that matches the rule and its exact condition.

Quickest way: Perform, Excuse, Death: three-question check

When to use it: Use for one-line MCQs on Section 37 with about one minute available.

Question 1: Is the promise performed or tendered? If yes, the promisor is protected.
Question 2: Is there an agreement or a legal excuse? If yes, no duty to perform remains.
Question 3: Did the promisor die? Personal skill means a contrary intention is implied, so the legal representatives are not bound. Otherwise they are bound up to the estate.
Eliminate options that say performance can never be excused, or that heirs are personally liable beyond the estate.

Common mistakes in Obligation of Parties to Perform Contracts (Section 37)

Thinking only actual performance satisfies Section 37.
Students read 'perform' and ignore 'offer to perform'.
Fix: Remember the pair: perform or offer to perform. A valid tender counts.
Believing performance can never be excused.
The word 'must' sounds absolute.
Fix: Learn the exception: dispensed with or excused under the Act or any other law.
Saying the contract always ends on death.
Students confuse personal-skill contracts with all contracts.
Fix: Only contracts relying on personal skill or confidence are not binding on heirs. Others bind legal representatives.
Making legal representatives personally liable for all debts.
Students overlook the limit on liability.
Fix: State that liability is limited to the property of the deceased that they receive.
Ignoring the words 'unless a contrary intention appears'.
Students memorise the rule without its condition.
Fix: If the contract says it ends on death, or its nature implies it, legal representatives are not bound.

Worked examples

Example 1

Ramesh agrees to sell 100 bags of rice to Suresh for ₹2,00,000. Ramesh dies before delivery. Who is bound to deliver? (a) Nobody, the contract ends (b) Ramesh's legal representatives, out of his estate (c) Suresh only (d) Ramesh's heirs, out of their own personal property

Show the solution

Identify the nature of the contract: sale of goods, no personal skill needed.
Section 37: promises bind the legal representatives unless a contrary intention appears.
The contract has no clause ending it on death.
Liability is limited to the estate of Ramesh.

Answer: (b) Ramesh's legal representatives, out of his estate.

Example 2

Meena, a painter, agrees to paint a portrait for Anil for ₹50,000, relying on her own skill. She dies before starting. Are her legal representatives bound to get it painted?

Show the solution

The contract depends on Meena's personal skill.
Only Meena could perform it as agreed, so the contract is personal in nature.
Because of this nature, a contrary intention is implied under Section 37.
So the legal representatives are not bound to perform.

Answer: No. The contract is personal in nature, so a contrary intention is implied and her legal representatives are not bound.

Exam tips

Expect MCQs testing the phrase 'perform or offer to perform' and the exceptions to it.
Watch the words 'always', 'never' and 'only'. They usually make an option wrong.
For death questions, first check whether the contract is personal.
Link Section 37 with Sections 38 and 62 to 67. Questions may mix tender, novation and impossibility.

Practice questions from Performance of Contracts

Obligation of Parties to Perform Contracts (Section 37): frequently asked questions

What does Section 37 of the Indian Contract Act say?

It says parties must perform or offer to perform their promises unless performance is dispensed with or excused under the Act or any other law. It also says promises bind the legal representatives of the promisor unless a contrary intention appears.

What is an offer to perform?

It is a tender, where the promisor is ready and willing and offers to do his part. If the promisee refuses, the promisor is not held to have broken the contract.

When is performance excused?

Performance is excused when the parties agree to cancel, change or waive it, or when the law releases the promisor, for example by impossibility or illegality arising later.

Are legal representatives always liable if the promisor dies?

No. They are bound only if the contract does not need personal skill and shows no contrary intention. Their liability is limited to the estate they receive.