CHANAKYA NATIONAL LAW UNIVERSITY

The final draft for the fulfilment of project of Law of Contracts

on

PERFORMANCE OF THE RECIPROCAL PROMISES

Submitted to:-Mrs. Sushmita Singh

Faculty of Law of Contracts

Submitted by:-Kumar Sushant

Roll No. 1537

1st year B.A.LLB. (Hons.)

TABLE OF CONTENTS

S. NO PARTICULARS PAGE
1. ACKNOWLEDGEMENT
2. RESEARCH METHODOLOGY
4. INTRODUCTION
5. CHAPTERS
RECIPROCAL PROMISE
CONSIDERATION REGARDING RECIPROCAL PROMISE
THE EXISTING LEGAL DUTY RULE
RECIPROCAL PROMISE IN INDIAN LAW
CASE LAWS
6. CONCLUSION
7. BIBLIOGRAPHY
 ACKNOWLEDGEMENT
I would like to thank my faculty Mrs. Sushmita Singh, whose assignment of such an interesting
and erudite topic made me work towards knowing the subject with a greater interest and
enthusiasm and moreover she guided me throughout the project.
I owe the present accomplishment of my project to my friends, who helped me immensely with
sources of research materials throughout the project and without whom I couldnt have
completed it in the present way.
I would also like to extend my gratitude to my parents and all those unseen hands who helped me
out at every stage of my project.

RESEARCH METHODOLOGY
This project is based upon doctrinal method of research.
Sources of Data:
The following secondary sources of data have been used in the project-
1. Articles.
2. Books
3. Journals
4. Websites

INTRODUCTION
Promises which form the consideration for each other are called "reciprocal promises" or
"mutual promises." It is common knowledge that "bilateral contracts," where both contracting
parties have to perform their promises, involve "mutual promises" amongst the parties. In such
contracts each party gives a promise, in return for a promise; e.g., A promises to sell certain
goods to B and B, in return promises to pay the price thereof to A, and there is an obligation on
each party to perform his own promise and to accept performance of other's promise.
Reciprocal promises may be classified into three categories:
(1) Mutual and Independent,
(2) Mutual and Dependent, and
(3) Mutual and Concurrent Sections 51 to 54 of the Contract Act lay down the rules regarding the
order of performance of reciprocal promises, which are stated below:
1. Mutual and Independent:
Where each party must perform his promise independently without waiting for the performance
or the willingness to perform of the other, the promises are 'mutual and independent.' According
to Section 52, such promises must be performed in the order expressly fixed by the contract, and
where the order is not expressly fixed, they must be performed in that order which the nature of
the transaction requires.
2. Mutual and Dependent:
Where the performance of the promise by one party depends on the prior performance of the
promise by the other party, the promises are 'mutual and dependent.' Section 54 provides for such
promises and lays down that if the promisor who is required to perform his promise in the first
place, fails to perform it, such promisor cannot claim the performance of the reciprocal promise,
and 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.
3. Mutual and Concurrent:
Where the two promises are to be performed simultaneously, they are said to be 'mutual and
concurrent.' According to Section 51, in the case of such promises the promisor need not perform
his promise unless the promise is ready and willing to perform his reciprocal promise.
4. Consequences where a party prevents performance:
"When a contract contains reciprocal promises and one party to the contract prevents the other
from performing his promise, the contract becomes voidable at the option of the party so
prevented; and he is entitled to compensation from the other party for any loss which he may
sustain in consequence of the non-performance of the contract." (Sec.53)

A Support A Reciprocal Promise

Consideration

Issue 1: Did The Parties Engage In Mutual Promises

In order for a promise by A support a reciprocal promise by B sufficient consideration must
be established. According to Beaton v McDivitt, per Kirby P, agreement alone does not
formulate an enforceable contract. Both parties to the contract must present significant
consideration which is an essential requirement in determining whether a contract is
enforceable or not. Accordingly, this means that both parties pursuing agreement must
promise to give or do something in exchange for the other. Here, A has made a promise in
which B made a reciprocal promise. Essentially, both parties have mutually exchanged
promises thus consideration has been established and the promises are enforceable by law.

Issue 2: Benefit/Detriment Requirement -Did The Promisee

Incur A Detriment Or Confer A Benefit On The Promisor.
According to Currie v Misa, Lush J. stated that consideration consists of a detriment to the
promisee or a benefit to the promisor:

A valuable consideration in the sense of the law must consist in some right, interest, profit
or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given,
suffered or undertaken by the other. Applied here, this means that B suffers a detriment in
that they have to forego their promise in order to receive benefits from A. A assumes a
benefit as a result of B's detriment.

Issue 3: The Benefit Or Detriment Must Be Given In Return For

The Promise
The benefit conferred on the promissor or the detriment suffered by the promise must be
given in return for the promise. This is regarded as the bargain requirement. In Australian
Woollen Mills v Commonwealth , it was held that initially it must be established that the
promise is given at the request of the promisor and in reliance upon the promisor's promise
before the act can be regarded as consideration. Thus the acts must be performed in return for
the promise.

Asquith LJ states in the case of Combe v Combe:

I do not think an actual forbearance, as opposed to an agreement to forbear to approach the
court, is a good consideration unless it proceeds from a request, express or implied, on the
part of the promisor. If not moved by such a request, the forbearance is not in respect of the
promise

Here, if B, wishes to rely on the principle stated in Australian Woollen Mills v

Commonwealth, they must prove that A requested B to perform an act in return for A's
promise.

Issue 5: Sufficiency Of Consideration

The doctrine of consideration provides that consideration must be sufficient but not need to
be adequate. However it must be something the law regards as valuable. If it is evident that
consideration has some value, the courts will not examine whether it's adequate or not
Woolworths Ltd v Kelly. Thus A's promise to be B must be supported by sufficient
consideration in which the law regards as valuable

Conclusion
In conclusion in order for A' promise to be supported between both parties the benefit
detriment requirement must be satisfied which will ultimately create a contractual agreement
between the parties

1.Do Such Reciprocal Promises Constitute

Sufficient Consideration?
The doctrine of consideration provides that consideration must be sufficient but not need to
be adequate. Thus, it must be something the law regards as valuable Thomas v Thomas.

Issue: When Is Consideration Sufficient/Not Sufficient?

Brian Coote answers the question as to how an exchange of reciprocal promises gives rise to
the benefit and detriment requirement and how these mutual promises are sufficient:

A person who makes a commercial promise expects to have to perform it (and is in fact
under considerable pressure to do so). Correspondingly, one who receives such a promise
expects it to be kept. These expectations, which can exist even where the promise is not
legally enforceable, are based on commercial morality, and can properly be called a
detriment and a benefit; and they satisfy the requirement of consideration in the case of
mutual promises.

Thus, reciprocal promises are considered sufficient as they bring forth the notion of benefit
and detriment which as noted above is a requirement of the doctrine of consideration.

Issue: Past Consideration

However in some cases consideration may be proved to be insufficient. Past consideration is
not considered as sufficient consideration. According to Lord Denman CJ in Roscorla v
Thomas:

It may be taken as a general rule, that the promise must be coextensive with the
consideration.

It was held that in a situation where an act is done before a promise is made to pay for it does
not amount to sufficient consideration for the subsequent promise.

The Existing Legal Duty Rule

The existing legal duty rule is most commonly raised when one party attempts to vary or
modify the contract in order to assume an additional obligation or agrees to release the other
party from obligation. However, a promise to perform an existing legal duty is not good
consideration Collins v Godefroy. This principle was stated in TA Sundell & Sons Pty Ltd v
Emm Yannoulatos Pty Ltd, in which the court held that a promise to perform an existing duty
is no consideration, and the promisor is bound to do only what they were supposed to under
the original contract.
However, there are exceptions to this. If what is promised is in excess of one's public law
duty there will be good or sufficient consideration Hartley v Ponsonby. According to J W
Carter, Andrew Phang and Jill Poole:

The existing duty rule does not apply if the duty has been exceeded, because legal and
factual values coincide.

This law essay is an example of a student's work

Disclaimer

This essay has been submitted to us by a student in order to help you with your studies. This
is not an example of the work written by our professional law writers.

This notion is further explored in the classical case of Stilk v Myrick, where it was decided
that a promise to perform an existing legal duty is not enforceable.

There was no consideration for the ulterior pay promised to the mariners who remained
with the ship. Before they sailed from London, they had undertaken to do all that they could
under all the emergencies of the voyage. The desertion of a part of the crew is to be
considered an emergency of the voyage... and those who remain are bound by the terms of
their original contract to exert themselves to the utmost to bring the ship in safely to her
destined port.

Mason J asserted that in Wigan v Edwards the new promise, indistinguishable from the old,
is an illusory consideration'.

In contrast, in the case of Williams v Roffey Bros & Nicholls (Contractors) Ltd, it was held
that a promise to perform an existing duty was sufficient consideration because by doing so it
will gain an advantage through a persistent relationship with the promisee

2.Should Such Reciprocal Promises Be

Considered As Good Consideration In The
Modern Commercial Context?
Australian contract law has changed extremely over the years. According to John Gava and
Peter Kincaid, if these changes are viewed separately then they perhaps could be considered
as incremental. However, when viewed from a wider perspective, they can amount to a
revolution. John Gava and Peter Kincaid assert that in areas such as consideration there has
been a decisive, but not complete shift away from will based contract.

Originally, in the 16th century, good consideration for manufacturing a promise was
considered to be evidence supporting that a promise was actually made, thus making it
enforceable. In the 18th century the concept of a moral obligation prevailed and the notion
that the promisor was under a moral obligation to the promisee was considered sufficient
consideration. However in the 19th Century the Doctrine of Consideration was widely
criticised in many aspects.

The doctrine of consideration, with its emphasis upon exchange, and its general rejection of
more for the same', seems inadequate for the modern environment in which flexible rewards
may reflect the employer's concern that the importance of individual staff to an enterprise
may not remain constant and may alter. Although versions of the classical doctrine have
exercised an important influence in English employment law, there now appears to be a
noticeable disinclination to use the doctrine as a problem-solving technique. This is
especially so in relation to the variation cases as well as those concerned with the
enforcement of apparently gratuitous benefits in formal policies, such as equal opportunities
policies..

In the 19th century the courts adopted a different view to the concept of consideration.
Emphasis on the bargaining process came to prevail in the law of contract, as per Blackburn
J stipulates in Bolton v Madden:

The general rule is that an executor agreement, by which the plaintiff agrees to do
something on the terms that the defendant agrees to do something else, may be enforced if
what the plaintiff has agreed to do is either for the benefit of the defendant or to the trouble
of prejudice of the plaintiff. If it be either, the adequacy of the consideration is for the parties
to consider at the time of making the agreement, not for the court when it is sought to be
enforced.

Accordingly, this means that promises made were not enforceable unless there was an
exchange between both parties to the contract. Furthermore, modern theories of the doctrine
of consideration also assert that the exchange of promises between parties must be regarded
as something valuable in the eyes of the law as per Patteson J states in Thomas v Thomas:

Consideration means something which is of some value in the eye of the law.

Barry Hough and Ann Spowart-Taylor assert that the classical theory of consideration may
not be supported in employment law. Furthermore, Barry Hough and Ann Spowart-Taylor
argue that in Employment law the courts are developing alternative conclusions which
ultimately undermine or exclude the classical theory of consideration as demonstrated in
Taylor v Secretary of State for Scotland.
There are certain misconceptions about the law of consideration in modern times. Brian
Coote stipulates that these sort of misconceptions in modern times stem from the definition
of consideration in Currie v Misa, in which the meaning of benefit and detriment is taken to
suggest that consideration is found in the benefits to be derived from the contract rather than
something exchanged at the point of formation.

However, Barry Hough and Ann Spowart-Taylor argue that in employment law this can be
considered conflicting because an employer's offer of a benefit to the employee, such as a
pay increase, is not usually relied upon the employee suffering a detriment in order to obtain
the additional reward.

Furthermore, issues such as equal opportunities policy is also examined within the article. It
is contended that an employer's promise not to discriminate is not usually the result of a
bargained-for exchange in which a recipricol promise of performance on behalf of the
employee is asserted. This principle is supported by Grant v SW Trains Ltd .

Thus, emphasising that the classical model of consideration is insufficient in these modern
circumstances.

Problems Associated With Pre Existing Contractual Duty

As previously established, the case of Stilk v Myrick outlined the rules governing promises
to perform existing duties is not considered sufficient consideration unless fresh
consideration is provided. Barry and Ann Spowart-Taylor argue that this version of the
doctrine allows the employer to step back from a formal promise that is not supported and
any reliance on behalf of the employee is irrelevant. However in WPM Retail Ltd v Lang, the
courts were unable to use the classical doctrine of consideration. In this case an employee
claimed rights to obtain a bonus stipulated in their contract only if he achieved a certain
performance in his work. The courts in determing the outcome held that the performance on
behalf of the employee placed demands on him in order to obtain the bonus.

The classical doctrine of consideration poses many problems in the employment relations as
already established. As technology and globalisation changes employers are encouraged to
react to more modern conditions by developing flexible work structures. This flexibility in
rewards may consist of offering employees additional rewards in order to preserve key staff
members. The doctrine of consideration with its emphasis upon the bargain process is
ineffective here in the modern commercial context, as flexible rewards display the
importance of the staff member to the company which may not remain consistent. Ultimately,
this means that employers are encouraged to offer their employees additional rewards in
order to maintain their relationship and ensure they that don't resign. Barry Hough and Ann
Spowart Taylor contend that:

If flexibility dictates both job and function insecurity, employers must find means of
motivating their workforce other than the implicit offer of job security. Formal and ostensibly
donative promises are a response to this need. Promises of enhanced terms and conditions are
the employer's retort to any possible threat that valuable, highly skilled staff may be lost to a
competitor. If the new flexible working does destroy job security, co-operation will suffer in
an environment viewed as one-sided or unfair. This suggests that employees will expect
some reciprocation for the new instability of the flexible environment.

Conclusion
In conclusion it is evident that the classical doctrine of consideration is not consistent within
the modern commercial context. Ultimately, courts are engaging in alternative theories to suit
changing globalisation conditions. This is seen through decisions mentioned above in which
the courts are resilient in applying the classical mode of consideration. As mentioned above
in modern commercial times the existing legal rule theory is ineffective WPM Retail Ltd v
Lang. Furthermore, flexible working arrangements do not accord with the classical theory of
consideration and employers are moving toward providing flexible working arrangements.
Ultimately, the classical bargain theory is not consistent within the modern commercial
context and the decision in the cases mentioned above are simultaneously moving toward a
direction in deciding cases concerned with consideration.
CONCLUSION

In civil law systems, a synallagmatic contract is a contract in which each party to the contract is
bound to provide something to the other party.[1] Its name is derived from the Ancient Greek ,
meaning mutual agreement.[2] Examples of synallagmatic contracts include contracts of sale, of
service, or of hiring.

In common law jurisdictions, it is roughly the equivalent of a bilateral contract and may be
contrasted with a gift (as such a relationship is not one of contract) or a unilateral contract in
which only one party makes an enforceable promise.

In his comments on the case of Hong Kong Fir Shipping Co Ltd. v Kawasaki Kisen Kaisha
Ltd. (1957), Lord Diplock said:

"Every synallagmatic contract contains in it the seeds of the problem - in what event will
a party be relieved of his undertaking to do that which he has agreed to do but has not yet
done?" S
BIBLIOGRAPHY
1. advocateji.com/performance-of-reciprocal-promises
2. www.shareyouressays.com/.../8-important-rules-regarding-performance-of-reciprocal...
3. legal-dictionary.thefreedictionary.com/reciprocal
4. www.lawyersclubindia.com Forum Civil Law General Practice
5. shttps://www.scribd.com/document/339444686/Reciprocal-Promise