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Cases where time is considered to be the essence of the contract

In the following cases, time is usually considered to be the essence of the contract:
  • When the parties have expressly agreed to treat the time as the essence of the contract
  • When the non-performance at the specified time operates as an injury to the other party
  • When the nature and necessity of the contract requires the performance of the contract within the specified time

Note: In case of mercantile contracts, the time fixed for the delivery of goods is considered to be the essence of a contract and not the time fixed for the payment of the price. Transactions regarding the purchase and sale of shares also generally consider time as the essence of the contract.

 

Mercantile transactions as well as transactions involving purchase and sale of shares are inherently volatile in nature and witness sporadic change in price and therefore a delay in delivery of the same would put the party not at fault in a position more hazardous and thus time is generally considered to be the essence of the contract in such transactions.




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