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Time As The Essence Of The Contract (Section 55):


“Time is the essence of the contract” means that the time is an essential factor and the concerned parties must perform their respective promises within the specified time.


Time Is Essence:
In a contract, in which time is of the essence of the contract, if there is a failure on the part of the promisor to perform the obligation within the fixed time, the contract becomes voidable at the option of the promise. If, in such case, the promise accepts the offer after the fixed time, he cannot claim any compensation for the loss sustained due to non-performance of the promise at the agreed time. However, where at the time of accepting the delayed performance he gives notice to the promisor of his intention to claim compensation, he can do so.


Time Is Not Of Essence:
n a contract, in which time is not of the essence, failure on part of the promisor to perform his obligation within the fixed time does not make the contract voidable, but the promise is entitled to compensation for any loss sustained to him by such failure.


Appropriation Of Payments:
Where debtor is having several debts and he does not pay all the debts simultaneously, the following rules shall apply:

(i) Application of payment where debt to do discharged is indicated:
 It means that whatever is paid; is paid according to the intention or manner of the party paying.

(ii) Application of payment where debt to do discharge is not indicated:
 If the debtor owing several debts to the creditor has not intimated, which debt is to be adjusted, at the time of payment, the creditors is entitled to appropriate it to any legal debt including time barred debt but not disputed debt.

(iii) Application of payment where neither party appropriates:
Where neither party makes any appropriation, the payment shall be applied in discharged of the debts in order of time; whether they are or not barred by the law in force. If the debts are of equal standing, the payment shall be applied in discharged of each proportionately.

Effects Of Neglect Of Promise (Section 67):

If any promise neglect or refuses to afford the promisor facilities for the performance of a promise, the promisor is discharged from the performance of his promise. The promisor cannot be held liable for the non-performance.

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