This article is written by Sayantani Talapatra of South Calcutta Law College during her BA LLB Course in her internship during LeDroit India.
ABSTRACT
The article defines what is contract with the basics of the contract and most imoportantly time being the most vital and crucial area of it.It also covers the section 55 of the Indian Contract Act.In the first phase of the paragraph I have also highlighted why contracts are very much important in our day to day lives as in every agreement when get formally agreed with the terms and conditions of the parties entering into the contract make the contract valid.It also defines the core legal consequences of delaying the contract or in other words what the parties usually faces as the consequences when they usually fails to perform the contract within the particular period of time.In the para mentioned as the basics of the contract it usually highlights the essentials of it . Thus this abstract paragraph gives us an idea about the scope or the article or the content what it is dealing with.
Scope of the article / List of topics covered:
- Introduction
- Meaning and basics of a contract.
- Why time is the essence of the contract ?
- Core legal Consequences of Delay.
- Remedies for a delay.
- Keywords.
- Relevant Case Laws.
INTRODUCTION :
Contracts are very important in our daily lives, without the existence of contracts and agreements no gapping between the actual intention of the parties and their motive to perform the contract can be solved and no real life transactions can take place in the world to establish clear accountability.Agreements are not legally enforceable by law or legally binding by law so the concept of contracts came to being for making it more legally accountable between the parties who are entering into the contracts by considering certain terms and conditions.To make it more effective we know that the contracts often come with various deadlines and conditions which are useful for the parties when they are lapsed due to some unavoidable conditions .Upon all the conditions essential for entering into the contract the topic upon which I am writing time is generally known as the important factor of any type of contract.When the parties to a contract often face the problem of not abiding by the time period mentioned in the contract in that case the contract usually becomes void but the parties often legal consequences for not abiding by the terms and conditions of the contract in general.Failure to perform or to abide by the contract can also be called as the breach of contract leading to the failure of the existing contract.
MEANING AND BASICS OF A CONTRACT :
Agreements when legally enforceable by law take the shape of contracts by following certain terms nad conditions depending upon the parties or the type of contract they are usually making on as considering the modern day scenario there are various type of contracts available in our daily lives.But to make the agreement or any type of agreement eligible to be considered as a contract it genrally has to follow certain essential elements to be considered as a contract.
Essential elements for an agreement to be considered as a contract or we can say that the basics of a contract :
- Offer and acceptance :We can explain this term as the one of the essential or the basic of a contract.Supposing one party proposes something to another party for a an agreement or maybe for a basic transaction but if in the due course of time the other party to the offer does not grant his/her consent accepting the offer then in that case the agreement is not made as for any type of agreement to be made the first and the foremost condition of the agremment is mutual offer and acceptance by both the parties .
- The agreement must be legally binding between the parties :The second most important point of the contract is that th agreement must be legally enforceable.When after performing the offer and acceptance of a particular type of agreement the parties enter mutually into a contract then the second most importan condition for making it valid comes into existence and that is the agreement must be enforceable in the court or in the eyes of law .In that case only we can consider the following agreement to be legally enforceable by law ,which usually makes it easier for the parties to apply for certain kinds of remedies when there is a breach of contract to the agreement by not abiding to certain terms and conditions.
- Consideration :Going into the third and the most important factor of any contract that is consideration to it .When parties are entering into an agreement they usually gives or promises to give something to the other party in return of their promises or can say something in ecxchange of the other thing provided by the other party.The thing which the parties are exchanging with each other needs to have an actual legal value or we can say that the thing which the parties are exchanging in terms of each other should be legally binding that is it cannot be illelegal or against the public policy . Thus consideration is the most important factor for an agreement to be legally vaild or enforceable by law .
- Capacity of the parties to the contract :We can define this as the parties who are entering into the contract or the agreement should be legally competant or be competenant enough to enter into the binding contract, the parties should fulfil the essentials of a contract to be legally valid .Like we can say that parties should not be a minor and should have a sound mind and shoud not be disqualified by law.Like the above mentioned points are most important for the parties to enter into the contract.
Thus ,the above mentioned points are the most important for the contract to be legally vaild or we can say that the points are literally showing the basics of the contract.
WHY TIME IS THE ESSENCE OF THE CONTRACT ?
Time is generally known as the essence of contract as it acts as a fundamental thing between both the parties who are agreeing to the terms and conditions of the contract.When a particular contract is formed then time act as the most important barrier for the contract to stay intact.
Suppose two parties are making any type of contract giving a particular time period then in that case to perform the specific contract there should always be a fixed time mentioning the terms and conditions of the contract.
Section 55 of the Indian Contract Act beautifully defines the time as the most essential thing of the contract.In an abstract sense this paragragh usually defines why time is the essential element as in the very first case when one of the parties failed to perform the contract then in that case the contract becomes voidable at the option of the other party.And in the other or the second case the contract when the factor time is not essential usually doesnot makes the contract voidable based on the terms and conditions of it but the parties to the contrcat can usulally seek compensation for the loss that they have suffered. Thus section 55 of the Indian Contract Act clearly defines the two best possible scenarios which are the most important part of this sectio defining when time is essential and what happens to the paerties when the factor time is not essential part of the contract.
CORE LEGAL CONSEQUENCES OF DELAY.
As we have mentioned earlier that contracts are usually being made depending on the terms and conditions performed by both the parties of the contract but when that kind of situation arises when the parties failed to perform the basics of the contract then the most important factor to lookout is to see that in the contract time is treated as the most essential element of it as depending on the time is essential part of the contract there are two types of conditions arising after the terms and conditions of the contract.In the first case when time is generally treated as the most important factor defiining the contract in that case the contract which is being agreed by both the parties upon agreeing to the terms and conditions of it becomes voidable and in this particular type of scenario the parties to the contract cannot usually seek compensation as the remedy to the contract as in this case the clause of time or when time is generally not treated as the essential element of it the parties to the contract then they cannot seek the compensation . So from the above mentioned facts it is thus very clear from the conversation that when the time is not mentioned as the most important clause of the contract to the contrat to take shape then in that case there is usually no question of the parties seeking compensation for the loss that they have usulally suffered depending on any type of situation they have faced.
And in the other case when we see that time is known as the essential factor of the contract then as per the conditions mentioned in section 55 of the act the contract made by two parties by agreeing to the terms and conditions of the parties to the contract usually does not becones voidable depending on any type of situation and the contract made by both the parties to the contract usually remains valid fo the parties to seek compensation depending upon the conditions which are generally performed by the parties of the contract.When the parties to the contract usually asks for compensation when time is mentioned as the essential element of the contract in that case the compensation amount which the parties ought to get is usually measured by the actuall loss suffered by the parties who entered into the contrcat by agreeing to the terms and conditions of the contract.The loss amount is usually defined or calculated by the actual financial loss suffered by both the parties to the contract.In some special cases the contract gets waived by the parties and furthermore when the contract gets extended or the parties generally extends their deadline depending upon the terms and conditions of the contract in that case the time period of the contract gets extended and in that case also if the parties cannot fulfil the terms and conditions within the particular deadline mentioned in the contract then in that csae the contract usually gets cancelled or terminated when the aggreived parties fails to perform the contract within the deadline which gets extended after following certain terms nad conditions of the contract agreed by the both the parties. And to define the core legal consequences for delaying the contract the contract when it is not being performed under certain special conditions in that case for example when the parties to the contract face certain impossible event or supernatural forces depriving the parties to perform the certain obligations mentioned in the contract in that case the sceoecif concept of the doctrine of frustration usually come to picture when the parties fails to perform it under certain unnatural or unusual consequences leading to the concept of taking doctrine of frustration as mentioned in section 56 of the Indian Contract Act to scenraio in picture.Thus the core legal consequences of delay has been beutifully in the above mentioned paragraphs.In the context of the doctrine of frustration mentioned in the last few lines of the contract the parties to the contract are usually not being liable for the breach they have caused depending upon the supernatural conditions or situations under which the contract is not usually being performed.To explain this concept which is included under the core legal consequences of delay we can highlight the important point where a situation exists suppose the parties for example the parties to the contract book a resort to execute their event and befor the happening or the occurrence of the following event the venue gets destroyed by some natural calamities or the happening of any event.So in this case we can say that the doctrine of frustration can be applied.
REMEDIES FOR A DELAY :
The parties to the contract can only seek a proper remedy when there is fixed time mentioned in the contract or we can say that in other words that the parties to the contract must have to make a fixed time limit mentioned in the contract otherthan which the compensation which they are seeking is not available because the compensation or remedy only get applied when there is a particular period of remedy in the contract clause.
When there is a specific mentioning of a fixed time period in the contract and the parties has failed to perform the contract within the specific time period mentioned in the contract in that case remedy or the place where the parties can seek for an remedy generally opens.In some cases the parties often offer for the extension for the period of the deadline of the contract in that case the parties can seek termination of it .And in the last and final case if the final deadline to the contrcat also gets missed in that csae the parties to the contract can generally apply for the termination of the contract period when the deadline also gets missed by the parties to the contract.
KEYWORDS.
AGREEMENT : In the above topic which I have written the most important keyword was agreement which is literally being used everywhere to show the time as the most important factor of the contract.
AGGREIVED PARTIES :The aggreived parties are basically those parties who had generally suffered the loss due to the non performance or other type of problems arising between them . This word has also been used in most of the phases and the caluses of the contract.
COMPENSATION : This term is being used in most of the lines of the topic where it is mentioned that parties can seek compensation when there is a mentioning of the fact of time being the most important essence of the contract and under which circumstances they can seek compensation .
RELEVANT CASE LAWS :
Saradamani Kandappan vs S. Rajalakshmi & Ors on 4 July, 2011
https://indiankanoon.org/doc/834739
In this case court has established the fact that even if the time is not cnsidered as the most important factor for the performance of the existing contract between the both the parties to the contract who has made the contract by agreeing to certain terms and conditions of it , the contract needs to be performed within the specific time period mentioned in it .
Mcdermott International Inc. v. Burn Standard Co. Ltd. (2006)
The option of minimum judicial interference was established in this case.
