Chapter IV - Of the Performance of Contracts
Section 63
Section 63: Dispensing with or remitting performance
Section 63 allows the promisee to dispense with or remit promised performance, extend time or accept a different satisfaction. The promisee's actual decision and the scope of acceptance matter.
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This article is for general information. Refer to the Indian Contract Act, 1872 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
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 forbids him to do so. A is no longer bound to perform the promise.
(b) A owes B 5,000 rupees. A pays to B, and B accepts, in satisfaction of the whole debt, 2,000 rupees paid at the time and place at which the 5,000 rupees were payable. The whole debt is discharged.
(c) A owes B 5,000 rupees. C pays to B 1,000 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 2,000 rupees. This is a discharge of the whole debt, whatever may be its amount.
(e) A owes B 2,000 rupees, and is also indebted to other creditors. A makes an arrangement with his creditors, including B, to pay them a composition of eight annas in the rupee upon their respective demands. Payment to B of 1,000 rupees is a discharge of B’s demand.
Rule and business relevance
The power includes wholly or partly remitting performance and accepting satisfaction considered appropriate. The illustrations include acceptance of a smaller payment in satisfaction of a larger debt and payment from a third person accepted in full satisfaction.
Limits and related provisions
A smaller payment is not automatically a full discharge merely because the debtor calls it final. Establish what the promisee accepted or remitted. Authority to bind an organisation and any separate legal requirements also need checking.
Hypothetical business example
Hypothetical: a creditor agrees to accept a stated lesser amount as full satisfaction of an invoice and receives it on that basis. The parties preserve the settlement terms rather than leaving the effect of the payment ambiguous.
Practical decision flow
Identify the promisee and the authorised person making the remission or satisfaction decision.
Record whether the change is partial or full remission, more time or substituted satisfaction.
Document the actual acceptance and update balances and obligations consistently.
Check the applicable legal framework
This guide explains the central provision. Applicable State amendments, the agreement, transaction date and other governing laws can affect its application. Check the current legal framework before relying on it for a commercial decision.
Practical checklist
Do
- Identify the promisee and the authorised person making the remission or satisfaction decision.
- Record whether the change is partial or full remission, more time or substituted satisfaction.
- Document the actual acceptance and update balances and obligations consistently.
Avoid
- A smaller payment is not automatically a full discharge merely because the debtor calls it final. Establish what the promisee accepted or remitted. Authority to bind an organisation and any separate legal requirements also need checking.
Glossary
- Remission
- Dispensing with the whole or part of promised performance.
- Satisfaction
- The performance or payment accepted instead of the original promise.
Frequently asked questions
Does any short payment automatically discharge the whole debt?
No. Establish the promisee's acceptance in satisfaction or actual remission.
Can time for performance be extended under this section?
Yes. The stated powers include extending time.
Can accepted satisfaction come from a third person?
The statutory illustrations include third-person payment accepted in satisfaction of the claim.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026