WEEK 2 Performance of contract

Performance
Contracts are made to be performed. When parties enter into a contract, they
generally do so in the expectation that it will be performed according to its terms.
Indeed, a contract consists of a number of terms which determine the scope of the
performance obligations which the parties have accepted. A failure to perform in
accordance with these terms is a breach of contract, which will entitle the other party
to the contract to an appropriate remedy (Photo Production Ltd v Securicor Transport
Ltd [1980] AC 827, see Section 20.3).
However, in many cases the formation of the contract and the performance of the
contract are practically simultaneous. For example, I purchase a newspaper at a
nearby shop. Here my offer to buy the paper and the shopkeeper’s acceptance of my
offer occur at virtually the same time as the performance of the contract in the
handing over, and the payment for, the newspaper. Atiyah (1986b) asks: ‘Is it really
sensible to characterise these transactions as agreements or exchanges of promises?’
He argues that obligations are really created by what we do, not what we promise or
what we intend: in other words, it is the payment of the money and the handing over
of the newspaper which form the basis of the obligations created, not the promise to
pay or the promise to hand over the newspaper.
It must be conceded that in many cases formation and performance are practically
simultaneous. This fact is often obscured by contract textbooks because formation
appears at the beginning of the book and performance towards the end. But in the real
world the two often occur at virtually the same time. On the other hand, there may be
a considerable time lapse between formation and performance. For example, I may
order a special anniversary issue of a newspaper which is not due for publication for
another three weeks. In such a case I want to know at the moment that I reach
agreement with the shopkeeper that he will order and deliver to me a copy of the
newspaper. Here there appears to be no doubt that the agreement is the basis of our
obligations, not any action in reliance upon the agreement. It is submitted that the
same is true when formation and performance are virtually simultaneous. In my
example of the purchase of a newspaper, the source of the obligations created remains
my promise to buy the paper and the promise of the shopkeeper to sell the newspaper;
our actions are simply evidence of the fact that we have reached agreement (see
Section 1.4).