TIME AND PLACE OF PERFORMANCE

 

TIME AND PLACE OF PERFORMANCE

The parties are free to decide as to when and where the performance of the contract is to be made. Sections 46 to 50 lay down the principles for the performance of contracts containing different stipulations as to time and place for the performance of the contracts.

(1) Time for performance of promise, where no application is to be made and no time is specified.

According to Section 46:

"Where, by the contract, a promisor is to perform his promise without application by the promisee, and no time for performance is specified, the engagement must be performed within a reasonable time.

Explanation. The question "what is a reasonable time" is in each particular case, a question of fact." The above provision makes it clear that even though no time for performance is, decided by the parties, the contract is not rendered void for uncertainty. The performance, in such a case, has to be made within a reasonable time. Section 36(2), the Sale of Goods Act also contains a similar provision and provides that when the seller is bound to deliver the goods, but no time for sending them is fixed, the seller is bound to send them within a reasonable time.

(2) Time and place for performance of promise, where time is specified, and no application to be made.

According to Section 47:

"When a promise is to be performed on a certain day, and the promisor has undertaken to perform it without application by the promisee, the promisor may perform it at any time during the usual hours of business on such day and at the place at which the promise ought to be performed."

When the promise is to be performed on a certain day, the promisor's duty in such a case is to perform the contract during the usual business hours on such day. If the goods to be delivered are supplied after the usual closing time, the buyer may reject them.

Illustration

A promises to deliver goods at B's warehouse on 1st January. On that day, A brings the goods to B's warehouse, but after the usual hour for closing it, and they are not received. A has not performed his promise.

(3) When the promisee is to apply for performance, he must do so proper time and place.

According to Section 48:

"When a promise is to be performed on a certain day, and the promisor has not undertaken to perform it without application by the promisee, it is the duty of the promisee to apply for performance at a proper place and within the usual hours of business. Explanation. The question "what is a proper time and place" is, in each particular case, a question of fact."

(4) Place for performance of promise, where application to be made and no place fixed for performance.

According to Section 49:

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

Illustration

A undertakes to deliver a thousand maunds of jute to B on a fixed day. A must apply to B to appoint a reasonable place for the of receiving it, and must deliver it to him at such place.

(5) The performance of any promise may be made in any manner, or at any time which the promisee prescribes or sanctions.

According to Section 50:

Illustrations

(a) B owes A 2,000 rupees. A desires B to pay the amount to A's account with C, a banker. B, who also banks with C, orders the amount to be transferred from his account to A's credit, and this is done by C. Afterwards, and before A knows of the transfer, C fails. There has been a good payment by B.

(b) A and B are mutually indebted. A and B settle an account by setting off one item against another, and B pays A the balance found to be due from him upon such settlement. This amounts to a payment by A and B, respectively, of the which they owed to each other.

(c) A owes B 2,000 rupees. B accepts some of A's goods in reduction of the debt. The delivery of the goods operates as a part payment.

(d) A desires B, who owes him Rs. 100, to send him a note for Rs. 100 by post. The debt is discharged as soon as B puts into the post a letter containing the note duly addressed to A.

Effect of failure to perform the contract in time.

According to Section 55:

When one party fails to perform the contract in time, the question may arise as to what remedy the other party can have in a case. Section 55 mentions two different remedies: one in a case when the time of performance is the essence of the contract, and the other when the time is not the essence of the contract.

1. When time is the essence of the contract

When time is the essence of the contract, non-performance of the contract in time would frustrate the purpose which the parties have in mind, and, therefore, if in such a case, there is delay in the performance by one party, the other party has a right to avoid the contract.

Whether the time is the essence of the contract or not depends on the intention of the parties. The parties either expressly or by their conduct can make time as essence of the contract. If the parties have not expressed their intention, then it depends on the nature of contract. In a contract of sale of goods, "unless a different intention appears from the terms of the contract, stipulations as to time of payment are not deemed to be the essence of a contract of sale. Whether any other stipulation as to time is the essence of the contract or not depends on the terms of the contract."

 

When the time of performance is the essence of the contract and the same is extended, the extended date is also the essence of the contract. When the prices of the goods are subject to rapid fluctuations, the time of delivery is deemed to be the essence of the contract.

 

In case of sale of immovable property, the time is generally not the essence of the contract but can become so in some contracts.

In contracts for the sale of immovable property, "mere incorporation in the written agreement of a clause imposing penalty in case of default" does not by itself evidence an intention to make the time the essence. Intention to make time the essence, if expressed in writing, must be in language which is unmistakable; it may also be inferred from the nature of the property agreed to be sold, conduct of the parties and the surrounding circumstances at or before the contract."

Where agreement in clear terms had specified that it was to be performed within six months else

It is clear that in the case of sale of immovable property, there is no presumption as to time being the essence of the contract. Even if it is not of the essence, it is ruled that the Court may refer that is to be performed in a reasonable time if the conditions are evident:

(i)                  from the express terms of the contract;

(ii)                from the nature of the property; and

(iii)               from the surrounding circumstances, for example, the object of making the contract.

When performance within specific time not insisted

If the agreement does not insist performance within a specified time, the time may not be the essence of the contract.

In Bismillah Begum v. Rahmatullah Khan, A.LR. 1998 S.C. 970 it has been held that if there is a contract regarding reconveyance of immovable property fixing time limit within which option to re-purchase is to be exercised, the time is the essence of the contract. If the option to re-purchase is not exercised within the stipulated time, the said option in favour of the plaintiff must be deemed to have lapsed. When the time was not originally the essence of the contract, it could be made so by a later notice, and if the time is the essence of the contract, that may be waived by the conduct of the parties.? Where the time is of the essence of the contract and one party waives the right to insist on the performance by the stipulated time and allows an extension, his act does not operate as an entire waiver of the essential condition as to time, but merely has the effect of substituting the extended time for that originally fixed.

Commercial Contracts

In commercial contracts, a stipulation as to time for the shipment of the goods has been regarded to be the essence of the contract. A stipulation as to time of shipment also forms part of the description of the goods sold within the meaning of Section 15 of the Sale of Goods Act and the non-fulfilment of this condition would render the contract voidable.

Extension of time

The promisee in a contract may make certain concessions to promisor under Section 63 and one of such concessions is to extend the time specified for the performance of the contract.' But there can be no unilateral extension, i.e., the extension of time occurs only by the agreement of the two parties. In M/s. Venkateswara Minerals v. Jugalkishore , A.I.R. 1986 Kant. 14, a specific date for the supply of red oxide by A to B had been fixed and it was emphasized that the time was the essence of the contract. The performance not having been made in time, B wrote to A that he was prepared to extend the time finally by one week and on failure to supply the goods by the extended date, the offer of extension of time would be withdrawn. Neither the letter was replied by A nor was the performance made by him even during the extended time. It was held that the purported extension of time by B was not agreed to by A and hence there was no extension of time. B could, therefore, sue A on the basis that there had been no extension of time.

When time is the essence of the contract, mere extension of time may not affect his stipulation, and the extended time may now be the essence of the contract instead of the time originally fixed.

Right to avoid the contract, if delay in performance

When time is the essence of the contract, it is expected that the promisor would perform the contract within the stipulated time. On his failure to do so, the promisor has a right to avoid the contract. In this regard, Section 55 (para 1) states as under:

"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 the essence of the contract."

2. When time is not the essence of the contract

It has been noted that when time is of the essence of the contract, the delay in performance by one party entitles the other to avoid the contract. When the time is not the essence of the contract, it must be performed within a reasonable time. The delay in the performance of such a contract does not make the contract voidable, but the remedy available to the aggrieved party in such a case is to claim compensation. The relevant provision in this regard, which is contained in Section 55 (para 2) is as under: "If it was not the intention of the parties that time should be the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time, but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure."