Sections 63 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
These three sections sit under the heading "Contracts which need not be performed". Section 63 lets a promisee give up, reduce or defer what is owed to him or accept something else instead. Section 64 says what follows when a voidable contract is rescinded. Section 65 says that anyone who received an advantage under an agreement found void, or a contract that became void, must restore it or compensate for it. If you are settling a dispute or unwinding a deal, our legal consultation service can help you choose the right route.
A promisee may dispense with or remit, wholly or in part, the performance of the promise made to him, extend the time, or accept any satisfaction he thinks fit (s.63). When a voidable contract is rescinded, the other party need not perform, and the rescinding party must restore any benefit received so far as may be (s.64). When an agreement is discovered to be void, or a contract becomes void, whoever received an advantage must restore it or compensate for it (s.65).
Section 63: promisee may dispense with or remit performance
The text says that 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." (The source prints "promisee made to him" in one place, an evident misprint for "promise"; we have followed the sense.)
Four powers are listed:
- Dispense with performance wholly.
- Remit it in part.
- Extend the time for performance.
- Accept "any satisfaction which he thinks fit" instead.
Footnotes: the source marks a comparison with section 135 on the words "extend the time", and the illustration (c) carries a cross-reference to section 41. Section 135 is in the chapter on guarantee and not part of this article.
The Act's illustrations to section 63
| Illustration | Facts | Result |
|---|---|---|
| (a) | A promises to paint a picture for B. B afterwards forbids him to do so. | A is no longer bound to perform. |
| (b) | A owes B Rs. 5,000. A pays and B accepts Rs. 2,000 in satisfaction of the whole debt, at the time and place at which the Rs. 5,000 were payable. | The whole debt is discharged. |
| (c) | A owes B Rs. 5,000. C pays B Rs. 1,000, and B accepts it in satisfaction of his claim on A. | The payment is a discharge of the whole claim. |
| (d) | A owes B an unascertained sum. A, without ascertaining it, gives B, and B accepts in satisfaction, Rs. 2,000. | A discharge of the whole debt, whatever its amount. |
| (e) | A owes B Rs. 2,000 and other creditors. A arranges with all of them, including B, to pay a composition of eight annas in the rupee. | Payment to B of Rs. 1,000 is a discharge of B's demand. |
A footnote records that "composition" in illustration (e) was substituted by Act 12 of 1891 for "compensation".
Look at the words in (b): the lesser sum is paid at the time and place at which the larger sum was payable. The Act's illustration does not say more than that.
Section 64: consequences of rescission of a voidable contract
"When a person at whose option a contract is voidable rescinds it, the other party thereto need not perform any promise therein contained in which he is 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 from whom it was received."
Two consequences:
- The other party is released from any promise of his in the contract.
- The rescinding party must restore any benefit he received, "so far as may be".
A footnote points to section 75 (compensation to a party who rightfully rescinds). The Act does not give illustrations to s.64.
Section 65: advantage received under a void agreement or contract
"When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received it."
Two cases are covered: an agreement discovered to be void, and a contract that becomes void later (for example, under section 56; see section 56). The duty is to restore the advantage or make compensation for it.
The Act's illustrations to section 65
| Illustration | Facts | Result |
|---|---|---|
| (a) | A pays B Rs. 1,000 for B's promising to marry C, A's daughter. C was dead at the time. | The agreement is void, but B must repay A the Rs. 1,000. |
| (b) | A contracts to deliver 250 maunds of rice before 1 May. A delivers only 130 maunds, before that day, and none after. B retains the 130 maunds after 1 May. | B is bound to pay A for them. |
| (c) | A, a singer, contracts to sing for a theatre manager B on two nights a week for two months at Rs. 100 a night. On the sixth night A wilfully absents herself, and B rescinds. | B must pay A for the five nights on which she had sung. |
| (d) | A contracts to sing for B at a concert for Rs. 1,000, paid in advance. A is too ill to sing. | A is not bound to compensate B for lost profits, but must refund the Rs. 1,000 paid in advance. |
Illustration (d) shows that the restoration duty is about returning what was received. The Act's illustration states that the singer is not bound to compensate for loss of profits that B would have made.
A modern example (ours)
Nisha pays Rs. 50,000 as a deposit to Omkar Studios for a wedding shoot on 12 December. On 1 December the shoot becomes impossible because the venue is destroyed by fire. The contract has become void; under s.65 Omkar Studios, having received an advantage, must restore it, that is refund the Rs. 50,000, or make compensation for any part that is not returned. Separately, if Nisha had agreed to accept Rs. 40,000 back "in full and final settlement" of her claim, the Act's illustrations (b) and (d) to section 63 show how a promisee's acceptance of a lesser satisfaction discharges the claim.
What can the parties change?
Sections 63 to 65 do not use "contrary intention" language. Section 63 is itself a power of the promisee, and parties usually record any variation or settlement in a written release. For sections 64 and 65, contracts often include refund clauses, forfeiture clauses or cancellation fees. Whether those displace the sections depends on the wording and on case law not covered here.
Practical points
- Record a settlement properly. If you accept less, say that it is in full and final satisfaction and for which claim.
- Reserve rights when you give extra time or accept part payment, if you intend to continue the claim.
- On rescission, return what you received, and keep a list with dates and values.
- For a void contract, send a written request for refund or restoration.
- Related reading on changing a deal by agreement: section 62.
Need help settling or unwinding a contract?
Whether to accept a smaller sum, rescind a voidable contract, or demand back an advance depends on the exact terms and facts. Our legal consultation team can read your documents and explain the options under sections 63 to 65. Bring the contract, payment proofs and any messages about the dispute.
Key takeaways
- A promisee may dispense with or remit performance wholly or in part, extend the time or accept any satisfaction he thinks fit (s.63).
- On rescission of a voidable contract, the other party need not perform, and the rescinding party must restore benefits received so far as may be (s.64).
- Anyone who received an advantage under an agreement found void or a contract that becomes void must restore it or compensate for it (s.65).
- The Act's illustrations include a refund of Rs. 1,000 for a void promise, and payment for the five nights a singer sang.
Read next
- Section 62: novation, rescission and alteration of contract
- Sections 66 and 67: communicating rescission and promisee neglecting to afford facilities
- Section 75: compensation to party rightfully rescinding contract
Disclaimer: Based on the text of the Indian Contract Act, 1872 as consulted on 1 October 2026. Many questions under this Act turn on case law and on the wording of the particular contract, which this article does not cover. It is general information, not legal advice; check the official text and take advice before acting.