Effect of failure to perform at a fixed time | A agreed to sell to B a thresher by the 5th of August, 1998 as it was required by B for his wheat crop. A repeatedly assured B that delivery would be made within a stipulated time… B sued A for damages on account of damage to the crop… Decide.

Question: Effect of failure to perform at a fixed time | A agreed to sell to B a thresher by the 5th of August, 1998 as it was required by B for his wheat crop. A repeatedly assured B that delivery would be made within a stipulated time.

A failed to deliver the machine by the agreed date upon which B tried his best to get one from the market but he could not. Rains come around the 20th of August, 1998 damaging stocked wheat in the field of B. B sued A for damages on account of damage to the crop due to rain, stacking charges, and loss due to a fall in prices. Decide. [DJS 1999]

Find the answer to the mains question only on Legal Bites. [Effect of failure to perform at a fixed time | A agreed to sell to B a thresher by the 5th of August, 1998 as it was required by B for his wheat crop. A repeatedly assured B that delivery would be made within a stipulated time… B sued A for damages on account of damage to the crop… Decide.]

Answer

Section 55 of the Indian Contract Act: Effect of failure to perform at a 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 promisee if the intention of the parties was that time should be of the essence of the contract.

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 of 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 as an injury;
3. Where the nature and necessity of the contract require it to be so construed, for example, where a party asks for extension of time for performance.”

The well-known authority is Bhudra Chand v. Betts [(1915) 22 Cal LJ 566]. In this case, 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 October and yet did not deliver the elephant till the 11th.

The plaintiff refused to accept 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 an extension of time.”

In cases of sale transactions, the courts would have to see on the facts of each case involving a sale transaction whether the time factor was essential to performance or not. In a contract of sale of goods, the time of shipment is of the essence.

There is a considerable authority in support of this rule and it has been recognized and accepted in Bowes v. Shand [(1877) LR 2 AC 455 (HL)]. Here is a contract of sale of rice to be shipped at Madras during March or April 1874, by a ship of the name of Rajah of Cochin, the stipulation in regard to shipment was held to be a condition of the contract and the contract was held to be not satisfied by shipment a month earlier, that is, in February. A contract for the sale of goods required fifteen days’ loading notice.

The court regarded it as a condition of the contract. The courts require precise compliance with stipulations as to time whenever the circumstances of the case indicate that that would fulfil the intention of the parties and that, in general, time is of the essence in mercantile contracts.

Thus, applying the aforesaid provisions and rationale of the judgments to the present case at hand, which is a case of sale transaction of thresher between A and B by 5th of August, 1998 as it was required by B for his wheat crop. A even repeatedly assured B that delivery would be made within a stipulated time but he failed to deliver the machine by the agreed date upon which B tried his best to get one from the market but he could not. Consequently, devoid of thresher around the 20th of August, 1998 rain-damaged stocked wheat in the field of B.

This is clearly a case where the time is the essence of the contract and A repeated assurance to deliver it within the stipulated time indicates the intention of the parties to get the delivery by 5^th August. Because of the failure on part of A, there was a prolonged delay caused, resulting in damage of wheat of B.

Therefore, where, time of performance is of the essence of the contract, any delay will render the contract voidable at the option of the other party. So, B may reject the performance and immediately sue for the breach. But B may at his option accept the delayed performance. If he does so he cannot afterwards recover compensation for the delay, “unless, at the time of such acceptance, he gives notice to the promisor of his intention to do so”. Thus, B can sue A for damages on account of damage to the crop due to rain, stacking charges, and loss due to a fall in prices.

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Law of Contract Mains Questions Series: Important Questions for Judiciary, APO & University Exams

1. Law of Contract Mains Questions Series Part-I
2. Law of Contract Mains Questions Series Part-II
3. Law of Contract Mains Questions Series Part-III
4. Law of Contract Mains Questions Series Part-IV
5. Law of Contract Mains Questions Series Part-V
6. Law of Contract Mains Questions Series Part-VI
7. Law of Contract Mains Questions Series Part-VII
8. Law of Contract Mains Questions Series Part-VIII
9. Law of Contract Mains Questions Series Part-IX
10. Law of Contract Mains Questions Series Part-X