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IAI Actuarial Core Principles · Business Management · Implied terms, exclusion of liability, contractual remedies and damages

Bharat Re Services Ltd agreed to supply actuarial modelling software to Kaveri Life Insurance for delivery on 1 March, with the contract stating that time was of the essence. Bharat Re delivered on 20 March. Kaveri had not waived the delivery date. Which statement best describes Kaveri's legal position under Indian contract law?

Kaveri can treat the contract as voidable at its option. Because time was expressly essential and Bharat Re delivered late, the promisee may refuse the performance and rescind, and may also claim compensation. The contract is not automatically void, and no court order is required first.

  1. AKaveri may only claim nominal damages because delivery eventually took place
  2. BKaveri must accept the software and has no remedy because the contract was substantially performed
  3. CKaveri may treat the contract as voidable at its option, since time was essential and the promise was not performed on timeCorrect
  4. DKaveri may rescind the contract only if it first obtains a court order
  5. The contract is automatically void because performance was late

Explanation

Where time is of the essence and a promisor fails to perform by the agreed time, the contract becomes voidable at the promisee's option. Late delivery therefore allows Kaveri to rescind without any court order, and it may also claim compensation for loss. The contract is not automatically void, and it is not limited to nominal damages.

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