TIME FOR PERFORMANCE
Sometimes, the parties to a contract specify the time for its performance. Ordinarily it is expected that either party will perform his obligation at the stipulated time. But if one of them fails to do so, the question arises what is the effect upon the contract. Section 55 of the Indian Contract Act contains the answer.
S.55. Effect of failure to perform at fixed time, in contract in which time is essential. – When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promise, if the intention of the parties was that time should be of the essence of the contract.
Effect of such failure when time is not essential. – If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such things at or before the specified time; but the promise is entitled to compensation from the promisor for any loss occasioned to him by such failure.
Effect of acceptance of performance at time other than agreed upon – If, in case of a contract voidable on account of the promisor’s failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance, he gives notice to the promisor of his intention to do so.
Factors which make time of Essence
According to this section, if the intention of the parties was that time should be the essence of the contract, then a failure to perform at the agreed time renders the contract voidable at the option of the opposite party. “Time is generally considered to be the essence of the contract in the following three cases :
(1) Where the parties have expressly agreed to treat it as of the essence of the contract;
(2) Where delay operates an injury;
(3) Where the nature and necessity of the contract requires it to be so constructed, for example, where a party asks for extension of time for performance. ”
In the well known landmark judgment of Bhudra Chand v. Betts,
The plaintiff stipulated with the defendant to engage his elephant for the purpose of Kheda operations (to capture wild elephants). The contract provided that the elephant would be delivered on the 1st October, 1910; but the defendant obtained an extension of time till the 6th of October and yet did not deliver the elephant and sued for damages for the breach.
He was held entitled to recover as the parties intended that time should be of the essence of the contract. “This conclusion is confirmed by the circumstance that the defendant obtained an extension of the time; if the time were not of the essence of the contract, he need not have asked for extension of time.”