Reciprocal Promises

Section 2(f) defines reciprocal promises as promises which form the consideration, or part of the consideration, for each other — most ordinary contracts are made up of such promises (e.g. A promises to deliver goods, and B, in return, promises to pay for them).

Types of reciprocal promises:

• Mutual and independent — each party must perform their own promise irrespective of whether the other has performed theirs, and neither's default excuses the other; failure by one party only entitles the other to sue for damages, without being excused from their own performance.
• Mutual and dependent — the performance of one promise depends on the prior performance of the other; if the party who is to perform first fails to do so, they cannot compel the other party to perform.
• Mutual and concurrent — both promises are to be performed simultaneously (e.g. cash sale — payment and delivery of goods happening at the same time).

Rules affecting reciprocal promises:

• Where reciprocal promises are to be simultaneously performed, the promisor need not perform their promise unless the promisee is ready and willing to perform their reciprocal promise.
• Where one party to a contract prevents the other from performing their promise, the contract becomes voidable at the option of the party so prevented, and that party is entitled to compensation for any loss sustained due to the non-performance. …