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CMA Foundation · Fundamentals of Business Laws and Business Communication · Performance of Contracts

Under a contract, Anil promises to supply machine parts to Bharat Engineering by 15 April, and time is of the essence. Anil delivers on 20 April and Bharat accepts the delivery without giving any notice about compensation. What is the position under Section 55 (as in the official text without state amendment)?

Bharat cannot claim compensation for the delay. Because time was essential, the contract was voidable at its option, but by accepting the late delivery without giving notice of intention to claim compensation at the time of acceptance, it lost the right to compensation under Section 55.

  1. ABharat can claim compensation for the delay as of right
  2. BBharat cannot claim compensation for the delay, as he gave no notice at acceptanceCorrect
  3. CBharat may claim compensation only if the delay exceeded one month
  4. DThe contract becomes void automatically on 15 April

Explanation

Where time is essential, late failure makes the contract voidable at the promisee's option, not void. If the promisee accepts performance at another time, he cannot claim compensation for the delay unless he gives notice of his intention at the time of acceptance. Bharat gave none, so option A is wrong.

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