The Act lays down the following rules regarding performance of reciprocal promises:
To be simultaneously performed: When a contract consists of reciprocal promises to be simultaneously performed no promisor need perform his promise unless the promisee is ready and willing to perform his reciprocal promise (Sec 51).
(a) A and B contract that A shall deliver goods to B to be paid for by B on delivery. A need not deliver the goods unless B is ready and willing to pay for the goods on delivery. B need not pay for the goods unless A is ready and willing to deliver them on payment.
(b) A and B contract that A shall deliver goods to B at a price to be paid by installments, the first installment to be paid on delivery. A need not deliver unless B is already and willing to pay the first installment on delivery. B need not pay the first installment unless A is ready and willing to deliver the goods on payment of the first installment.
In order to enable one party to sue on the contract he must have performed his part of the reciprocal promise. Where promise can be enforced without the party showing performance of his part of the promise, promises are not reciprocal but independent of each other. Reciprocal promises are concurrent promises and, therefore, to be performed simultaneously. Both parties must be ready and willing to perform their parts of reciprocal promises, for example, in case of sale of shares of a company promise it transfer the shares and payment of price thereof are simultaneous.
Order in which reciprocal promises are to be performed: Where the order in which reciprocal promises are to be performed is expressly fixed by the contract, they shall be performed in that order. Where the order is not expressly fixed by the contract, they shall be performed in that which the nature of the transaction requires (Sec 52)
(a) A and B contract that A shall build a house for B at a fixed price. A’s promise to build the house must be performed before B’s promise to pay for it.
(b) A and B contract that A shall takeover his stock in-trade to B at a fixed price and B promises to give security for the payment of the money. A’s promise need not be performed until the security is given, for the nature of the transaction requires that A should have security before he delivers
In case of dependent promises where one cannot be performed: When a contract consist of reciprocal promises, such that one of them cannot be performed or that its performance cannot be claimed till the other has been performed and the promisor or the promisee last mentioned fails to perform it, such promisor cannot claim the performance of the reciprocal promise. He must make compensation to the other party to the contract for any loss which such other party may sustain by the non-performance of the contract (Sec 54)
(a) A hires B’s ship to take in and convey from Calcutta to Mauritius a cargo to be provided by A, B receiving a certain freight for its conveyance. A does not provide any cargo for the ship. A cannot claim the performance of B’s promise and must make compensation to B of the loss which B sustains by the non-performance of the contract.
(b) A contracts with B to execute certain builder’s work for a fixed price, B supplying the scaffolding and timber necessary for the work. B refuses to furnish any scaffolding or timber and the work cannot be executed. A need not execute the work, and B is bound make compensation to A of any loss caused to him by the non-performance of the contract.
(c) A contracts with B to deliver to him at a specified price, certain merchandise on board a ship, which cannot arrive for a month and B engages to pay for the merchandise within a week from the date of the contract. B does not pay within the week. A’s promise to deliver need not be performed and B must make compensation.
(d) A promises B to sell him one hundred bales of merchandise, to be delivered next day, and B promises A to pay for them within a month. A does not deliver according to his promise. B’s promise to pay need not be performed and A must make compensation.