Section 59 to 67

 Contract act 

Sec 59----   application of payment where debt to be discharged is indicated ----where a debtor owing to several distinct debts to one person makes a payment to him either with express intimation or under circumstances implying that the payment is to be applied to the discharge of some particular debt the payment ,if accepted must be applied accordingly 

This principal had been laid down in "in ree cliton " in 1816.

ILLUSTRATIONS 

A.A owes B among other debts 1000 rupees upon a promissory note

Which falls due on the first june 

He owes B no other debt of that amount 

On the first june A pays B 1000/ rupees .the payment is tobe applied to the discharge of the promissory note 

B.A owes to B among other debts the sum of 567 rupees .B writes to A and demands payment of this sum .a sends to b 567 rupees .this payment is to be applied to the discharge of the debt of which B had demanded payment .

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Section 60 . application of payment where debt to be discharged is not indicated ----where the debtor has omitted to intimate and there are no other circumstances indicating to which debt the payment is to be applied ,the creditor may apply it at his discretion to any lawful debt actually due and payable to him from debtor whether its is or not barred by the law in force for the time being as to the limitation of suits .

Even debt is time barred 

Even rate of interest is low 

But debt is not disputed 

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Section 61.----application of payment where neither party appropriates -----where neither party makes any appropriation .the payment shall be applied in discharge of debt in order of time whether they are or are not barred by the law in force for the time being as to limitation of suits .if the debts are of equal standing the payment shall be applied in discharge of each proportionably .

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Contract which need not to be performed 

Section 62 ---effect of novation ,rescission and alteration of contract ----if the parties to a contract agree to substitute a new contract for it or to rescind or alter it the original contract need not be performed .

This principal had been laid down in 

scarf versus jardain 

Essential elements of novation 

A.parties must be same or different 

Contract may be changed

Contract may be substituted 

Lata construction versus Ramesh Chandra 

Supreme court had laid down in this case that new contract must be complete sub situation of old contract there must be supercede clause to show cancellation of terms and conditions of previous condition 

ILLUSTRATIONS 

A.a owes money to b under a contract .it is agreed between a ,b and c .that b shall thenceforth accept c as his debtor instead of A .the old debt of a and b at an end .and a new debt from c to b has been contracted .

B .a owes b 10,000/ rupees .a enters into an agreement with b and gives b a mortgage of his estate for 5000/ rupees in place of debt of 10,000/ rupees .this is a new contract and extinguish the old .

C.a owes b 1000/ rupees under a contract b owes c 1000/ .b orders a to credit c with 1000 rupees in his books b does not assent to the arrangement .b still owes c 1000 rupees and no new contract has been entered into .

Important decision 

1.section 62 is applicable proceedings after absolute novation of contract .

Board of trustees versus passkill terminal limited chennai 

2.any basic change in done  deeply in contract this is also known as novation of contract 

Andheri bridge view housing cooperative society versus krishkant rao 

3.when the liability of principal debtor is taken by any other person this is known as novation of contract 

G.nambodripaad versus kerala finance cooperation 

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Section 63 ----promise may dispense with or remit performance of promise ---every promisee may dispense with or remit ,

Wholly or in part the performance of the promise made to him or may extend the time for such performance or may accept instead of it any satisfaction which he thinks fit .

Illustrations 

A.a promises to paint a picture for b .b afterwards forbid him to do so .a is no longer bound to perform the promise 

B.a owes b 5000 rupees a pays to b and b accepts in satisfaction of the whole debt 2000 rupees paid at the time and place at which the 5000 rupees were payable

C.a owes b 5000/ rupees .c pays to b 1000 rupees and b accepts them in satisfaction of his claim on A .this payment is a discharge of the whole claim .

D.a owes b under a contract a sum of money the amount of which has not been ascertained a without ascertaining the amount gives to b and b in satisfaction thereof accepts the sum of 2000/ .this is a discharge of the whole debt whatever may be it's amount .

E .a owes b 2000/ and is also indebted to another creditors .a makes an arrangement with his creditors including b to pay them a composition of eight annas  in the rupees upon their respective demands payment to b of 1000/ rupees is a discharge of b 's demands 

Important point of section 63 

1.give concession fully or partially 

2.extend the time 

3.accept any other fault 

4.a party can waive his right 

Land mark decision 

Kapoor chand Ghodha versus meer nawab himayat 

In this case 27 lakh was payable .creditor accepted 21 lakh rupees due to recommendation of a committee .after that he had filed a suit .according justice this condition comes under section 63 with section 43 of contract act .

Difference between 62 and 63 

In 62 agreement and consideration is essential 

In 63 there is no requirement of consideration and agreement 

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Section 64 ----consequences of rescission of voidable contract ------

When a person at whose option a contract is voidable rescinds it the other party thereto need not perform any promise there in contained in which he is the promisor .the party rescinding a voidable contract shall if he have received any benefit thereunder from another party to such contract ,restore such benefit .so far as may be ,to the person whom it was recieved .

Illustrations 

A.A sells his goods to B at high rate  under coercion .B recieve the goods .later he proved that this good he had been sold under coercion. Till then he did not give money . He had to return that good .he cannot retain that good in any case.section 64 .

Examples 

A is Don  who threatened at gun point  B to buy  his house at 5 lakh .the real price is 60 lakh .B entered into contract due to this threat .

Case A ---if A  has not given money to B .then A is not bound to perform this contract 

Case B if B has received money then he had to return  5 lakh rupees to him

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Section 65 -----obligation of person who has received advantage under void agreement or contract that becomes void -------

When an agreement is discovered to be void or when a contract become the void ,any person who has received any advantage such agreement or contract is bound to restore it or to make compensation for it to the person from whom he received it .

Example

1.A wants to sell his horse at 10000/.so he had paid 10000/ to A instead of horse.but at the time of agreement horse has died .but in this situation A will have to return 10000/ to A.this contract was valid but after that it become void .

2. A gave 2 lakh rupees to B to kill c . but B did not kill c .in this situation A cannot recover 2 lakh rupees because this agreement is void ab initio .

Illustrations 

A.a pays b 1000/  in consideration of B 's promising to marry c .a daughter c is dead at the time of the promise .the agreement is void but b must repay A the 1000/ 

B.a contract with b to deliver him 250 maunds of rice before the first of may .a delivers 130 maunds only before that day and none after .b retains the 130 maunds  after the first of may he is bound to pay a for them 

C.A ,a singer contracts with B the manager of a theatre to sing at his theatre for two night in every week during the next two months and B engages to pay her a hundred rupees for each night performance.on the sixth night A wilfully absent herself from thez theatre B in consequence rescinds the contract .B must pay A for the five nights on which she had sung .

D.a contract to sing for b at a contract for 1000 rupees which are paid in advance .A is too ill to sing A is not bound to make compensation to b for loss of the profit which would have made if a had been able to sing .but must refund to b the 1000/ rupees paid in advance.

66.mode of communicating or revoking rescission of voidable contract -----

The recession of voidable contract may be communicated or revoked in the same manner and subject to same rules as apply to the communication or revocation of proposal

Section 67 -----Effect of neglect  of promise to afford promisor reasonable facilities for performance ----

If any promise neglects or refuses to afford the promisor reasonable facilities for performance of his promise 

The promisor is excused by such neglect or refusal as to any non performance caused thereby .

Illustrations 

A contract with B to repair B's house .b neglects or refuses to point out to A the place in which his house requires repair .

A is excused for the non performance of the contract.if it is caused by such neglect or refusal 

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