By Whom Contracts Must Be Performed under Sections 40 to 45 of the Indian Contract Act, 1872: Personal Performance, Performance by a Third Person, Joint Promisors, Contribution and the Release of One Promisor

Six sections answer the questions of who must perform and to whom performance is due. Sections 40 and 41 deal with the single promisor: when he must perform in person, when a representative or a substitute will do, and what happens if the promisee accepts performance from a stranger. Sections 42 to 45 deal with plurality: how joint promisors are liable, how they share the burden among themselves, what the release of one does to the others, and how the right to demand performance devolves where the promise was made to several persons. On the last group Indian law departs from the English rule at three points, and each departure favours the creditor.

1. Personal Performance: Section 40

Sections 40 and 41, Indian Contract Act, 1872

40. If it appears from the nature of the case that it was the intention of the parties to any contract that any promise contained in it should be performed by the promisor himself, such promise must be performed by the promisor. In other cases, the promisor or his representatives may employ a competent person to perform it.

Illustrations. (a) A promises to pay B a sum of money. A may perform this promise, either by personally paying the money to B or by causing it to be paid to B by another; and, if A dies before the time appointed for payment, his representatives must perform the promise, or employ some proper person to do so. (b) A promises to paint a picture for B. A must perform this promise personally.

41. When a promisee accepts performance of the promise from a third person, he cannot afterwards enforce it against the promisor.

1.1 When personal performance is required

The test in Section 40 is the intention of the parties, gathered from the nature of the case. Personal performance is required where the identity of the promisor is material to the bargain, which is so in four recurring situations.

Contracts of personal skill or artistry, such as a promise to paint, to perform, to write or to design.
Contracts involving personal confidence, such as agency, and professional engagements where the client has chosen a particular adviser.
Contracts requiring a particular qualification or licence held by the promisor.
Contracts of employment, which cannot be assigned by either side, an employee not being obliged to serve a different employer nor entitled to send a substitute.

Where the promise is not of this character the promisor may perform through another, and on his death his representatives must perform or employ a proper person to do so. The Illustrations to Sections 37 and 40 read together make the point: a money obligation passes to the estate, a promise to paint a picture does not.

2. Performance by a Third Person: Section 41

Section 41 is short and is easily misread. It does not entitle a stranger to force performance on an unwilling promisee, and it does not say that a third party's performance discharges the promisor automatically. The operative word is accepts. Once the promisee has accepted performance from a third person, he has elected, and he cannot afterwards go back to the promisor for the same obligation.

📖 Hirachand Punamchand v. Temple, [1911] 2 KB 330 (CA)

Facts: A creditor was owed a sum by a young officer. The creditor wrote to the officer's father asking for information about the debt. The father sent a smaller sum, stating that it was sent in settlement of his son's account. The creditor cashed the draft and then sued the son for the balance.

Held: The action failed. The creditor, having accepted the smaller sum from a third person on the terms on which it was offered, namely in full settlement of the debt, could not afterwards sue the debtor for the balance. To allow him to do so would be a fraud on the third party who had paid on that footing, and the debt was to be treated as extinguished.

Ratio: Where a creditor accepts payment from a third person in satisfaction of the debtor's obligation, he cannot afterwards enforce the obligation against the debtor. Acceptance on the terms offered concludes the matter.

The Indian position rests on Section 41 and is reinforced by Section 63, under which a promisee may accept any satisfaction he thinks fit in place of performance without any consideration, which is why the English difficulty about part payment discharging a larger debt does not arise here. The Supreme Court applied the same reasoning in Kapur Chand Godha v. Mir Nawab Himayatalikhan Azamjah, AIR 1963 SC 250, holding that a person who accepts money on the condition on which it is offered cannot say that he accepted the money but not the condition.

3. Joint Promisors: Sections 42 to 44

Sections 42, 43 and 44, Indian Contract Act, 1872

42. Devolution of joint liabilities. When two or more persons have made a joint promise, then, unless a contrary intention appears by the contract, all such persons, during their joint lives, and, after the death of any of them, his representative jointly with the survivor or survivors, and, after the death of the last survivor, the representatives of all jointly, must fulfil the promise.

43. Any one of joint promisors may be compelled to perform. When two or more persons make a joint promise, the promisee may, in the absence of express agreement to the contrary, compel any one or more of such joint promisors to perform the whole of the promise.

Each promisor may compel contribution. Each of two or more joint promisors may compel every other joint promisor to contribute equally with himself to the performance of the promise, unless a contrary intention appears from the contract.

Sharing of loss by default in contribution. If any one of two or more joint promisors makes default in such contribution, the remaining joint promisors must bear the loss arising from such default in equal shares.

Explanation. Nothing in this section shall prevent a surety from recovering from his principal payments made by the surety on behalf of the principal, or entitle the principal to recover anything from the surety on account of payments made by the principal.

44. Effect of release of one joint promisor. Where two or more persons have made a joint promise, a release of one of such joint promisors by the promisee does not discharge the other joint promisor or joint promisors, neither does it free the joint promisor so released from responsibility to the other joint promisor or joint promisors.

3.1 Liability is joint and several in India

Section 43 is the most important of the group. In the absence of express agreement to the contrary, the promisee may compel any one or more of the joint promisors to perform the whole of the promise. He need not join all of them, and he need not apportion his claim. The liability of joint promisors in India is therefore joint and several, which departs from the older common law rule that a joint obligation had to be enforced against all the obligors together.

📖 Kendall v. Hamilton, (1879) 4 App Cas 504 (HL)

Facts: Creditors sued two members of a firm on a joint debt, obtained judgment against them and failed to recover. They then discovered the existence of a third partner who had been liable on the same debt, and brought a fresh action against him.

Held: The second action failed. At common law a joint obligation gives rise to a single cause of action. A judgment obtained against one or some of several joint debtors merges the cause of action in the judgment and bars any further action against the others, even though the judgment remains unsatisfied and even though the creditor was unaware of their existence.

Ratio: At common law all joint debtors must be sued together, and a judgment against one extinguishes the right of action against the rest. This is the rule that Sections 43 and 44 displace in India.

⚠ Three Indian departures from the English rule

First, under Section 43 the promisee may sue any one joint promisor for the whole, whereas at common law all had to be joined. Second, under Section 44 the release of one joint promisor does not discharge the others, whereas at common law a release of one released all. Third, and following from the first, a judgment against one does not bar an action against another in India, because the liability is several as well as joint. Each departure was deliberate and each favours the creditor, the policy being that a creditor should not lose his remedy through the accident of how many people happened to promise.

3.2 Contribution between joint promisors

Equal contribution is the default. Each joint promisor may compel every other to contribute equally, unless a contrary intention appears from the contract. The shares may therefore be unequal where the contract so provides or where the circumstances show a different understanding.
A defaulting promisor's share is borne equally by the rest. If one cannot or will not contribute, the remaining promisors share the deficiency in equal shares among themselves.
The right arises on payment. A promisor who has paid more than his share has the claim; one who has paid nothing has none.
The Explanation preserves the surety's position. A surety who pays recovers the whole from the principal debtor under Section 145, and is not confined to a rateable contribution. Conversely a principal who pays recovers nothing from his surety.
A release does not affect contribution. Section 44 expressly provides that the promisor released by the promisee remains answerable to his co-promisors, so the promisee cannot, by releasing one, shift that person's share onto the others.

Where the Indian rules part company with the common law, with contribution worked through

4. Devolution of Joint Rights: Section 45

Section 45, Indian Contract Act, 1872

When a person has made a promise to two or more persons jointly, then, unless a contrary intention appears from the contract, the right to claim performance rests, as between him and them, with them during their joint lives, and after the death of any of them, with the representative of such deceased person jointly with the survivor or survivors, and after the death of the last survivor, with the representatives of all jointly.

Section 45 is the mirror image of Section 42 and is drafted very differently from Section 43. Joint promisees must act jointly; there is no provision allowing one of them to demand the whole. The practical consequences are these.

All joint promisees must join in a suit to enforce the promise, and a suit by one alone is ordinarily bad for non-joinder unless the others are joined as defendants.
There is no survivorship in the English sense. On the death of one joint promisee, the right vests in his representative jointly with the survivors, not in the survivors alone. This is a clear departure from the common law rule of survivorship among joint creditors.
A discharge given by one joint promisee does not bind the others, the right being joint.
A contrary intention in the contract prevails, so parties frequently provide expressly that any one of several payees may give a good discharge.

5. The Six Sections Summarised

Section	Question answered	Rule
40	Must the promisor perform personally?	Yes where the nature of the case shows that was intended; otherwise he or his representatives may employ a competent person
41	What if the promisee accepts performance from a stranger?	He cannot afterwards enforce the promise against the promisor
42	Who must fulfil a joint promise?	All joint promisors during their joint lives; thereafter the representative of a deceased promisor jointly with the survivors
43	Can one joint promisor be sued for the whole?	Yes, absent express agreement to the contrary; and he may compel equal contribution from the others, a defaulter's share being borne equally
44	Does releasing one discharge the rest?	No, and the released promisor remains answerable to his co-promisors
45	How does a joint right devolve?	It rests with the joint promisees during their joint lives, and afterwards with a deceased promisee's representative jointly with the survivors

6. The Position Stated Shortly

Section 40 requires personal performance where the nature of the case shows that the parties so intended, which covers contracts of skill, confidence, qualification and employment.
In other cases the promisor or his representatives may employ a competent person, and money obligations pass to the estate.
Section 41 bars a claim against the promisor once the promisee has accepted performance from a third person.
Hirachand Punamchand v. Temple: a creditor who accepts a sum from a third party in settlement cannot sue the debtor for the balance.
Section 42 makes all joint promisors liable during their joint lives, with representatives joining the survivors afterwards.
Section 43 makes the liability joint and several: any one may be compelled to perform the whole, with a right to equal contribution and a rule for sharing a defaulter's share.
The Explanation to Section 43 preserves the surety's right to recover the whole from the principal under Section 145.
Section 44 provides that releasing one joint promisor discharges neither the others nor the released promisor's liability to contribute.
Kendall v. Hamilton states the common law rule that Sections 43 and 44 displace in India.
Section 45 requires joint promisees to act jointly and rejects survivorship, the representative of a deceased promisee joining the survivors.

7. Related Topics and Provisions

Topic or provision	Connection
Performance of Contract under Sections 37 to 39	The obligation, tender and refusal
Performance of Contracts under Sections 37 to 67	The chapter as a whole
Exceptions to the Rule of No Consideration	Section 63 and acceptance of any satisfaction the promisee thinks fit
Privity of Contract	Why a third person ordinarily acquires no rights under the contract
Section 37, Indian Contract Act	Liability of the representatives of a deceased promisor
Sections 40 and 41, Indian Contract Act	Personal performance and performance by a third person
Sections 42 to 45, Indian Contract Act	Joint liabilities, contribution, release and joint rights
Section 63, Indian Contract Act	Remission and acceptance of other satisfaction
Section 145, Indian Contract Act	The surety's right of indemnity against the principal debtor