Q. State the rules about time and place of performance of contract.


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Answer

It goes without saying that a contract requires a certain set of basic essentials that must be fulfilled in order to make it legally enforceable. But even when the parties to the contract have fulfilled these essentials, its validity can be questioned if the same is not fulfilled in due time and in accordance to prescribed manner.

Performance of contract means carrying out of promises and obligations undertaken by the parties according to the terms prescribed in the contract. Section 46-50 of the contract Act lay down the rules regarding the time and place of performance. Further, section 55 deals with the consequences of non-fulfillment of the conditions.

 

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Rules Regarding Time and Place of Performance of Contract

1.      Where no application is to be made (Sec 46):

In situations, where there is no time period specified for the performance of the contract, and the promisor has to perform the contract without any request by the promisee, in such a case the promisor must perform the contract within a “reasonable time”.

It should be noted here; the term reasonable time depends on the facts and circumstances of the case and will also depend on the nature of the transaction.

Illustration:

A, a sweet seller orders 50 KG milk with B. In this case, although A does not prescribed any time for the performance of the contract, but the nature of the contract requires, to perform it as soon as possible.

 

2.      Where time is specified and no application is to be made (Sec 47):

When date and place of performance is specified but nothing mentions about the time, then this section comes into play. This section describes that in case no specific time is mentioned, then the promisor should deliver the goods during the usual hours of business.

Illustration:

XYZ college administration orders for 500 chairs to be delivered on 1st day of Jan, 2022, by paying the advance payment. The other party accepts the offer. Since the time is not specified, it should be delivered between 10 am and 3 pm, assuming those are the regular timings for the college.

If the other party delivers the order after regular timings of the college, the administration will be no obligation to accept it.

 

3.      When Performance is to be made on a proper place and time but an application is to be made by the promisee to the promisor for its performance: (sec 48):

When the terms of the contract states that a performance of a contract has to be made on a particular day, but the promisor will only do so when the promisee makes an application to the promisor on that specific day for performance. Hence, here since it is specifically mentioned in the contract that the promisee has to request the promisor for performance on that specific day, he must do so at the proper place and during the usual business hours as specified by him.

Illustration

Shiv agrees to supply Prachi 50 cartons of alcohol on 3rd November at her office. As per terms of the contract, Prachi would have to request Shiv for performance. Thus, on the due date and within usual business hours, Prachi should request Shiv regarding a time and place for the supply of goods.

 

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4.      Where no place is fixed and no application has to be made to the promisor by the promisee (Sec 49):

When a promise is to be performed without application by the promisee and no place is fixed for the performance, it is the duty of the promisor to apply to the promisee to appoint a reasonable place for the performance of the promise and perform the promise at such place.

The place for the performance of promise implies both the delivery and payment of goods.

Illustration

Sheela entered into a contract for supplying 100 cartons of Gram Flour to Anu on 5th September at a specific price. On the due date of performance, Sheela must apply or request Anu for determining a reasonable place and also make the payment at the same place.

 

5.      Performance in manner or at the time prescribed or sanctioned by the promisee (Sec 50:

When the terms of the contract states that performance has to be made in the time and manner as specified by the promisee, then it has to be followed.

Illustration

Ankur’s son is in the hospital and needs money for his son’s operation. Harsh owes money to Ankur and agrees to repay him in at any place or time decided by Ankur. In this case, Ankur has the liberty to ask for the performance of the promise in any manner and at any place or time suited to him.

 

The consequence of Failure to perform the contract at a fixed time when the time is essence of the contract

Section 55 of the Indian Contract Act,1872 deals with the effect of failure to perform the contract at a fixed time when the time is essence of the contract, whether explicitly or impliedly.

This section states that if an act is not done within the stipulated time, the contract becomes voidable at the option of the promisee provided the Intention of the parties was that time should be of the essence of the contract.

Here, whether time was the essence of the contract or not depends on:

I.                     Intention of the parties and

II.                   On the nature of the contract.

 

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In the case of Trailakyanath Maity v. Provabati Santra: the Calcutta High Court observed: "Whether or not the time is the essence of the contract, must depend on the facts and circumstances of each case.

In the case of Bishamber Nath Agarwal v. Kishan Chand: It was held that if any agreement states that a particular act relating to the contracts is to be done within the particular time or manner, then it should be done in that time or manner. The other party has no right to manipulate the terms by his own.

In Bhudra Chand v. Betts (1915) the defendant promised to deliver an elephant to the plaintiff for the capture of a wild elephant as a part of Kheda Operations. The contract provided that the elephant would be delivered on the 1st of October, 1910, but the defendant obtained an extension of the time till 6th Oct and yet did not deliver the elephant till 11th. The plaintiff refused to accept the elephant and sued for damages for the breach.

It was held that the plaintiff was entitled to recover damages since it was proved that time was the essence of the contract since the defendant had tried to obtain an extension of time.

It was held in the case of China Cotton Exporters v. Beharilal Ramcharan Cotton Mills Ltd (1961) that in commercial contracts time is ordinarily of the essence of the contract.

 


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