I. WHAT IS RECIPROCAL PROMISE- AS PER INDIAN CONTRACT ACT,1872

In order to understand the Reciprocal Promise meaning, we must to first comprehend the definitions of proposal, promise, consideration and agreement as stated in the Indian Contract Act of 1872.

• Section 2(a): When someone expresses his willingness to do or not to do something, he/she is said to make a ‘Proposal’.
• Section 2(b): A proposal when accepted becomes a ‘Promise’.
• Section 2(c): The person making the proposal is called the “Promisor”, and the person accepting the proposal is called the “Promisee”.
• Section 2(d): When at the desire of the promisor, the promisee does or abstains from doing something or promises to do or abstain from doing something, then such act or abstinence or promise is called “Consideration”.
• Section 2(e): Every set of promises, forming consideration for each other is called “Agreement”.

According to the analysis above, reciprocal promises are what Section 2 (f) of the Indian Contract Act of 1872 defines as “Promises which form the consideration or part of the consideration for each other, are called reciprocal promises.”

II. RECIPROCAL PROMISE MEANING - EXPLAINED THROUGH EXAMPLE

An example of reciprocal promises would be if A expressed his desire to purchase an automobile from B for Rs. 10 lakhs. B accepts A's offer to sell the car and take the money based on B's statements.

• A has promised to pay Rs. 10 Lac = Section 2(b) attracted
• A is the promisor while B is the promise = Section 2 (c) attracted
• Due to A’s promise to pay, B promises to supply the car i.e., consideration = Section 2(d) attracted.

B’s promise to supply the car sets the agreement in place. Here, B’s promise to supply the car is an example of Reciprocal Promises.

III. TYPES OF RECIPROCAL PROMISES

Though the different types of reciprocal promises are not directly mentioned in the Indian Contract Act, 1872 but because we live in a common law nation, our laws are derived from judgments rendered by Indian and British courts. Since ‘Promise’ is the vital step in creation of a contract, it is crucial to determine what kind of promise is agreed between the parties since different set of promises are subject to different sets of legal regulations.

1. Mutual and Independent Reciprocal Promises:

This type of reciprocal promise has emerged through Jurisprudence. According to this, the parties’ two promises standalone from one another and are not dependent on one another in order to be fulfilled.

Example of Independent Reciprocal Promise:
Consider a scenario where John and Sam have an agreement that John will provide 100 kg of rice to Sam and Sam will provide a pair of black shoes to John. The lack of receipt of black shoes does not prevent John from keeping his commitment; in other words, he can give the rice to Sam even if Sam does not provide him the shoes. In the same way, Sam can provide the shoes irrespective of the fact whether John gives me 100 kg rice or not. The acts are therefore independent of one another even though they in their standalone capacity they are legally binding.

Independent Reciprocal Promise meaning can be understood through the case of Mrs Saradamani Kandappan vs. Mrs S. Rajalakshmi and Ors [Civil Appeal Nos. 4641-42/2002]. In this case, the Plaintiff was paying for a piece of land to Defendant in instalments. Before the payment of the last instalment, Plaintiff wanted to see the title document but there was a failure on the part of Defendant to show it and Plaintiff thus did not pay the last instalment.

As a result, Defendant terminated the contract. Plaintiff filed a motion in court, claiming that her inability to pay the last instalment was due to Defendant’s failure to produce the title document. The court ruled that the promises to show the title document and to pay for the last document were mutually exclusive because Plaintiff could pay the last instalment without seeing the title document. Therefore, Plaintiff should have paid the last instalment.

2. Conditional Reciprocal Promises

Reciprocal promise meaning conditional in nature are ones where one party’s performance under the contract is conditioned upon the other party’s earlier performance. It will not be possible for the second party to fulfil his obligations under the contract if the first party fails to keep his promise.

Example of Conditional Reciprocal Promise:
Consider a contract in which Lily promises to pay Rose if Rose promises to buy horse for Lily. If Lily defaults in paying the money to Rose, then Rose will not be able to perform her part of the agreement because due to lack of money she will not be able to purchase the horse if Lily fails to pay her. As a result, this is a conditional contract.

Conditional Reciprocal Promise meaning can be understood through case of M/s Shanti Builders vs. CIBA Industrial Workers’ Co-Operative Housing Society Ltd. [Suit No.1574 of 1980 With Suit No. 1301 of 1981, Decided on 11 May 2012, At High Court of Bombay]

The defendant, CIBA, claimed that they suffered losses as a result of Shanti Builders' failure to complete their work on time. Shanti builders, on the other hand, claimed they were not given plots of land in accordance with the payment for construction. They were unable to complete construction because this plot of land was not provided to them. The court ruled in favour of Shanti Builders, stating that if the nature of the transaction requires that some promises be fulfilled before others, that order must be followed. They also stated that, in the case of conditional promises, the first party cannot ask for the second party's performance without first performing their own act.

3. Concurrent Reciprocal Promises

This is a type of reciprocal promise in which the parties promise to perform acts that must be done concurrently. If the other party is not ready or willing to keep their promise, one party will be excused. In this case, 'readiness' refers to financial capabilities, and 'willingness' is demonstrated by the party's actions.

For example, A is providing pens to B. A will only supply the pens if B is able and willing to pay, and B will only pay if A is able and has the goods. This understanding between A and B is an example of what concurrent reciprocal promises mean.