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CMA Foundation · Fundamentals of Business Laws and Business Communication · Performance of Contracts

Under Section 37 of the Indian Contract Act, 1872, the parties to a contract must either perform, or offer to perform, their respective promises. Which of the following is a ground on which this obligation is relaxed?

The obligation to perform or offer to perform is relaxed only when performance is dispensed with or excused under the Contract Act or any other law. Inconvenience, rising costs, lower profit or a mere change of mind do not excuse a party from its promise.

  1. APerformance has become inconvenient for one party because costs have risen
  2. BPerformance is dispensed with or excused under the Act or any other lawCorrect
  3. COne party has changed its mind and informs the other before the due date
  4. DPerformance has become less profitable than the party expected

Explanation

Section 37 binds parties to perform or offer to perform unless performance is dispensed with or excused under the Act or any other law. Higher cost, change of mind or lower profit are not legal excuses, so the other options fail.

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