When is the time to deemed to be essence of the contract in performance of contracts ? Discuss
15/September/2025 22:16
Share:
Very important question — it goes straight into Section 55 of the Indian Contract Act, 1872. Let’s carefully discuss:
---
Time as the Essence of a Contract
General Rule
In commercial law, time is usually presumed to be important but not always essential.
Whether time is the essence of the contract depends on the intention of the parties, nature of the contract, and express terms of the agreement.
? Section 55 of the Indian Contract Act, 1872 states:
1. If time is expressly essential → failure to perform on time makes the contract voidable at the option of the promisee.
2. If time is not essential → the contract remains valid, but the promisee is entitled to compensation for delay.
3. If time is not essential initially, but the promisee gives notice making it essential, then failure after notice → contract is voidable.
---
When is Time Considered the Essence of a Contract?
1. When expressly mentioned in the contract
If the agreement clearly states that performance must be done “within or on” a certain date and that delay will not be tolerated.
Example: A agrees to deliver marriage outfits to B before B’s wedding date. The contract says “strict delivery before 15th June.” Delay cancels the purpose.
---
2. When nature of the contract makes timely performance vital
In contracts where the subject matter loses value after the fixed time, time is essential.
Examples:
Supplying food for a banquet.
Delivering materials for an exhibition/fair on fixed dates.
---
3. When parties intend time to be essential
Even if not expressly stated, surrounding circumstances may show that both parties considered time essential.
Example: Construction contract for a showroom to be inaugurated on a specific date.
---
4. In commercial contracts (generally)
In trade and mercantile contracts, time of delivery is often treated as essential, unless the contrary intention appears.
Case law: Union of India v. Chaman Lal Loona & Co. – In contracts for supply of goods to Government, time was held essential.
---
When is Time Not the Essence of a Contract?
In contracts relating to immovable property (sale, lease, etc.), time is generally not the essence, unless expressly mentioned.
Courts usually assume that slight delay does not make such contracts voidable; compensation may be claimed.
---
Example from Real Life
1. Essential: A catering company contracts to supply food on the wedding day of 20th January. If food is not delivered on time, the contract loses meaning → time is the essence.
2. Not Essential: A agrees to sell land to B, with possession on 1st March. Even if delivery is slightly delayed, the contract is not voidable, unless time was expressly agreed as essential.
---
✅ Conclusion
Time is the essence when:
1. Expressly stated in the contract,
2. Nature of the contract requires timely performance,
3. Parties’ intention or commercial context makes it vital.
If time is not essential, delay does not void the contract, but damages can be claimed.
