Chapter IV - Of the Performance of Contracts
Section 55
Section 55: Failure to perform at the agreed time
Section 55 distinguishes a missed deadline where time is essential from one where it is not. It also addresses compensation when the promisee accepts late performance under a contract voidable for delay.
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This article is for general information. Refer to the Indian Contract Act, 1872 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract.
Effect of such failure when time is not essential.—If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure.
Effect of acceptance of performance at time other than that agreed upon.—If, in case of a contract voidable on account of the promisor’s failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance, he gives notice to the promisor of his intention to do so.
Rule and business relevance
If the parties intended time to be of the essence, the unperformed contract or part becomes voidable at the promisee's option. Without that intention, delay does not make it voidable on that ground, but compensation for caused loss is available. The central third paragraph requires notice of an intention to claim delay compensation at the time late performance is accepted in its stated case.
Limits and related provisions
A date in a document is not a substitute for examining whether time was intended to be essential. Acceptance and notice need careful records. State amendments can change the third-paragraph position, so do not apply the central wording as an identical nationwide rule.
Hypothetical business example
Hypothetical: a buyer accepts a delayed delivery after a missed essential date. Before acceptance it checks the compensation-notice requirement and applicable State law rather than assuming a reservation can always be added much later.
Practical decision flow
Determine the deadline and whether the parties intended time to be essential.
Assess the option to avoid and the actual loss caused by delay.
Before accepting late performance, address the required compensation notice and applicable State variation.
Check the applicable legal framework
This guide explains the central provision. Applicable State amendments, the agreement, transaction date and other governing laws can affect its application. Check the current legal framework before relying on it for a commercial decision.
Practical checklist
Do
- Determine the deadline and whether the parties intended time to be essential.
- Assess the option to avoid and the actual loss caused by delay.
- Before accepting late performance, address the required compensation notice and applicable State variation.
Avoid
- A date in a document is not a substitute for examining whether time was intended to be essential. Acceptance and notice need careful records. State amendments can change the third-paragraph position, so do not apply the central wording as an identical nationwide rule.
Glossary
- Time of the essence
- The intention that timely performance has the significance described in the first paragraph.
- Late-performance notice
- The central third paragraph's notice of an intention to claim compensation at acceptance.
Frequently asked questions
Does every missed date allow avoidance?
No. The first paragraph depends on time being of the essence.
Can delay still justify compensation if time is not essential?
Yes, for the loss occasioned by the failure, as stated in the second paragraph.
Can accepting late performance affect compensation?
Yes. Read the central third paragraph and any applicable State amendment before acceptance.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026