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

Under the Indian Contract Act, 1872, what is the basic obligation of parties to a contract regarding their promises, unless performance is dispensed with or excused under the Act or any other law?

Parties to a contract must either perform or offer to perform their respective promises, unless performance is dispensed with or excused under the Contract Act or any other law. Performance or an offer to perform is the default duty, so parties cannot simply ignore their promises.

  1. AThey must either perform or offer to perform their respective promisesCorrect
  2. BThey must perform only if the other party has first paid in cash
  3. CThey may choose freely whether to perform or to ignore the promise
  4. DThey must perform only after obtaining a court order

Explanation

Section 37 states that parties must either perform, or offer to perform, their respective promises unless performance is dispensed with or excused under the Act or another law. The option allowing free choice contradicts this binding obligation. Payment in cash first or a court order is not a requirement.

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