THE NATIONAL LAW INSTITUTE UNIVERSITY, BHOPAL

Synopsis
Subject: Law of contracts-1
Topic- The essence of time and its effect

Submitted to: - Submitted by:

Neha Sharma Anay Mehrotra

(Professor in Contracts) (2020BALLB122)

Contents

Introduction
Research questions
Literature review

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 INTRODUCTION:

Each passing second is an opportunity gone to waste

For what do our lives accumulate to, in relation to space?
How are our lives but a fraction, of the universe’s continuation?
And can the human life be worth anything, with its separation?

For the soul is a being, entwined with another source of energy

So without another to carry on our will, how can there be a legacy?
It’s through kindred spirits that we as humans are able to embrace
Yet it is through each passing second that we shorten life’s race

So while bitterness resides and our bodies turn sour

And the hopes of success slip under each passing hour
All that has changed is but a hand upon the clock
For all that really distinguishes time, is a tick and a tock

The time for change is now, sever your ties from the herd
Strive for each new moment and be thankful for all that has occurred
For life is but an accumulation of figments and memories
How you decide to shape it depends on your thoughts and tendencies

So while others try to confine, by worshipping that of a shrine

Whilst wondering if our life’s line will ever unwind
We all wither and wind through the fabrics of time
Yet it is through the use of our minds, that we are destined to shine

In this time and age, it has become fairly easy to make contractual obligations, but the difficult part
of these contractual obligations is to actually perform the promise on time. For example, there

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could be a delay in delivering goods and services, or there could be a failure to pay the debtor on
time. Hence for all the delays caused by the promisor the law of our country provides various
remedies. It has now become a well-known fact that if there is a delay caused by the promisor
without any legitimate excuse then he will be liable for the damages caused due to the delay in
performance of the act. However, for the promisee to claim these damages, he or she must go to the
court, but going to the court may not be feasible unless there is a lot of money at stake. Hence in
the normal cases it would be more practical for the promisee to make use of the ‘termination clause
of the contract’ or make the contract void. In simpler words it is more feasible for the promisee to
cancel the contract with the current promisor and make another contract with a new promisor to do
the job.
Now, the crucial question arises as to when the promisee can terminate the contract if there is a
delay in competition of the job. The answer to this question is that whenever the clause of ‘time is
of the essence’ is inserted in the contract, the promisee has the leverage to make the contract
voidable if there is any delay in performing it. Now another critical question arises as to what does
‘time of essence’ mean and what are its effects in a contract.

The Indian Contract Act, 1872 talks about essence of time and its effects. Section 55 in particular
defines ‘essence of time of a contract’. It states “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”.1
Explanation. —The above stated clause in a broad concept tries to explain that the if section 55 of
the Indian Contract Act, 1872 is inserted in contract then the promisor has to complete the in a
given time period and if he fails to do so then the promisee has the power to void the contract or to
extend the deadline for the competition of the contract.
.
This project is going to explain the meaning of section 46, 47, 48, 49, 50 and 55 of the Indian
Contract Act. These sections cover the time of performance, application made by the promisee,
place of performance, time and manner of performance is prescribed by the promisee.
Furthermore, the project is going to deal with the liability of the promisor when a breach of

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contract takes place. Hence, the project is going to also cover section 73, 74 and 75 of the Indian
Contract Act,1872
The project will deal with the term time in general and essence of time and its effect on contractual
obligation specifically.

RESEARCH QUESTIONS:

The essence of time in a contract and its effects

The liability of the promisor due to breach of contract

Hypothesis

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 OBJECTIVES OF STUDY:

1. To understand the concept of time and its effects on contract.

2. To understand the rights of a promisee
3. To understand the concept of breach of contract if the promisor fails to deliver on time.
4. To analyze important case laws of where time was crucial factor

REVIEW OF LITERATURE:

1. The Indian contract act by Tyabji, Faiz B

2. The Indian Contract Act by Pollock and Mulla
3. Halsbury’s Laws of England’s
4. Indian Contract Act,1872

METHOD OF STUDY:

Doctrinal method of data collection has been used in this project.

Work Plan

1 Analyze the concept of time

2 Explain the essence of time
3 Write the effects of time
4 Analyze the concept of breach of contract
5 Briefly explain the different cases
6 Write conclusion and my opinion

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 RIGHTS OF A BAILEE IN A CONTRACT OF BAILMENT

1. Right to compensation for loss on account of fault in goods bailed – According to Section 150,
the bailee has the right to recover such loss from the bailor that he has incurred because of some
fault or faults in the goods bailed that was not disclosed to the bailee at the time of bailment.to
2. Right to receive necessary expenses – If the bailee has to keep something in his custody, to
transport it or to do any repair on it, and does not receive any compensation for the expense
incurred by him on such acts from anybody, he has the right to claim such expense from the bailor
for acts done for the maintenance of goods under bailment. For example, if A leaves his horse with
B, B is entitled to receive any expense he might have to incur on feeding the horse. The bailee is
also entitled to receive extraordinary expenses that he might incur on the maintenance of goods.
For example, if A’s horse falls sick and B has to incur extraordinary expense on its treatment, he
is entitled to recover such expenses from A.
3. Right against premature termination of bailment – According to Section 159, when the goods
are lent gratuitously, if the bailor demands the return of goods before the expiry of the period of
bailment, and the bailee suffers a loss in such return that exceeds the benefit actually derived by
him from the use of such goods, the bailee has the right to claim such expense from the bailor.
The bailee has this right only when he has acted as per the directions of the bailor for the duration
of bailment, and the loss to him by premature termination is greater than the profit he has made
during the period the goods were in his custody.
4. Right to compensation in case of defective title – According to Section 164, if the title of the
bailor on the goods under bailment is defective, i.e., the bailor does not have the right to keep the
goods in bailment, to receive them back or to give any directions of any kind about the goods, and
bailee is put to a loss on this account, the bailee has the right to damages from the bailor.
5. Delivery of goods to one of the joint owners – According to Section 165, if the goods have
bailed by several joint owners, the bailee may deliver them back to, or according to the directions
been of, one joint owner without the consent of all, if there is no agreement to the contrary.

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6. Right to inter-plead – Under the provisions of Sections 166 and 167, if the title of the bailor to
the goods is defective, and the bailee, in good faith, delivers them back to, or according to the
directions of, the bailor, the bailee is not responsible to the owner of goods for such delivery. If a
person other than the bailor claims the goods bailed, the bailee may apply to the court to stop the
delivery of goods to the bailor and to decide the title of goods.
7. Right of particular lien – According to Section 170, where the legal charges of the bailee in
respect of the goods bailed have not been paid, the bailee may retain the goods. The right of the
bailee to retain the goods is known as ‘particular lien’. It is important to point out here that the
bailee can only retain the goods-he cannot sell the goods. For example, A gives a diamond to B to
be cut, and B cuts it as per the directions, B can retain the diamond till such time that he is paid for
his labour, but he cannot sell the diamond to realise his changes.
8. Right to general lien – According to Section 171, some specific types of bailees have the right
the goods or property (which is in their possession) until all their claims are satisfied, even if the
claims are not with respect to the goods or property being held under bailment. General lien is
available only to banks, factors, wharfingers, attorneys of the High Court and brokers of insurance
policies.
9. Right against third parties – If a third person wrongfully deprives the bailee of the use or ion of
the goods held under bailment, the bailee has the right to bring an action against that respect of
the goods bailed. The damages received from such person. The bailor can also bring a suit in suit
are shared by the bailee and the bailor according to their rights.

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 RIGHT OF LIEN

Lien is a right given to a bailee of goods to retain the goods and securities with himself until some
legal debts due to him are not satisfied by the bailor. Under the right of lien, the bailee is not
endorsed to sell the goods but only has the right to retain possession of the goods. This varies from
other forms of charges as it does not arise from an implied or express agreement. It essentially
arises from the dealings between the parties.
According to Halsbury's law of England, "Lien is in its primary sense of right in one man to retain
that which it in his possession belonging to another until certain demands of the person in
possession are satisfied.
Conditions for exercising the Right of Lien

There are three important conditions which must be complied with to exercise the right of lien.
They are:
• The goods for which this right is to be executed has to be possessed by the bailee

• There has to be a lawful debt due to the bailee in possession of the goods by the bailor.

• There should not be any contract to the contrary.

Extent of the Right of Lien

The extent of the bailee’s right of lien covers his services, including any exercise of labour or skill
by him on the goods bailed with him. The right of lien only extends to the service of labour or
goods exercised by the bailor on the bailed goods and does not include any other service, neither
does it include any other goods. Nor does any lien attach to goods bailed to a person for the
purpose of his working with it, and not upon it1. Merely making an arrangement for the storage of

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goods in a godown for payment would not attract the right of lien since no

1
Steadman v. Hockley, (1846) 15 M&W 553; Bleaden v. Hancock, (1824-34) AII ER Rep 108.

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improvement in the goods takes place, nor is any labour or skill exercised in respect of such goods2.

Loss of Right of Lien

A bailee loses his right of lien when he loses possession of the goods bailed to him. In the case of
Eduljee v. Café John Bros.3, the seller sold a second hand refrigerator. After sometime there was
some trouble in it and two parts of the same were taken out and sent to the seller for repair work.
The seller, to whom the price had not been paid, wanted to exercise the right of lien. It was held
that the seller’s right of lien had come to an end when he had delivered the refrigerator to the
buyer.

TYPES OF LIEN

There are two types of Lien- Particular Lien and General Lien.

❖ PARTICULAR LIEN (SECTION 170)

“Where the bailee has, in accordance with the purpose of the bailment, rendered any service
involving the exercise of labour or skill in respect of the goods bailed, he has, in the absence of a
contract to the contrary, a right to retain such goods until he receives due remuneration for the
services he has rendered in respect of them.”
Examples of Particular Lien

1. A delivers a rough diamond to B, a jeweller, to be cut and polished, which is accordingly

done. B is entitled to retain the stone until he is paid for the services he has rendered.
2. A gives a cloth to B, a tailor, to make into a coat. B promises A to deliver the coat as soon as
it is finished, and to give a three months credit for the price. B is not entitled to retain the coat
until he is paid.

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2
Kallomal Tapeshwari Prasad & co. v. Rashtriya chemicals & Fertilizers Ltd., AIR 1990 All 214.
3
(1944) Nag 37, AIR 1943 Nag 249.

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 ➢ Workman’s lien for remuneration

Section 170 is bases on the common law principle that, “If a man has an article delivered to him, on
the improvement of which, he has to bestow trouble and expense, he has a right to detain it until his
demand is paid.”4 Further, “the artificer to whom the goods are delivered for the purpose of being
worked up into form, or the farrier by whose skill the animal is cured of a disease, or the horse-
breaker by whose skill he is rendered manageable, have liens on the chattels in respect of their
charges.”5
A bailee is entitled to particular lien in respect of certain goods, only when he has improved it by
the exercise of his labour and skill. Where the plaintiff company maintained the car of the
defendant and having taken the car into its possession and claimed lien for the expenses, its claim
was rejected by the court because it did not improve the car, it simply maintained the car.6 Section
170 provides that labour and skill exercised must be in accordance with the purpose of bailment. If
the bailee surrenders possession of the goods, his right to lien is lost. Under Section 170, if there is
any contract to the contrary, the bailee will not have his lien over the goods.
For remuneration for work done under an entire contract in relation to goods delivered at different
times, the workman is entitled to a lien on all the goods received under that contract.7 The lien will
not be available only if there is a contract to the contrary, i.e., a contract that goods will be returned
without waiting for remuneration and a contract merely fixing remuneration is not such a contract
to the contrary. A holder of a lien is a secured creditor. He may rest on his security and not prove it.
➢ Work must be fully done
Where there is a contract for repairing an article for a specific sum of money, the repairer cannot
retain the article, until payment of remuneration for work is partly done.8

➢ Work must be done within Time

4
Bevan v Waters, 1828 (3) Car & P 520.
5
Scarfe v Morgan, (1838) 4 M&W 270,283.
6
Hutton v Car Maintenance Co., 1915 (1) Ch 621.
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7
Miller v Nasmyth Patent Press Co., 8 Cal 312.
8
Skinner v Jager, 6 All ER 139; Judah v Emp., 63 Cal 174: AIR 1926 Cal 464.

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A bailee entrusted with an article to repair has no lien over it if he has not completed the repairs
within the stipulated time; or when time is not of the essence of the contract, within a reasonable
time.9

➢ Banker’s Lien
A banker’s lien under this section is only for a general balance of account.10
➢ Custody is not Service
A bailee has no right to retain the goods till payment for his custody as such custody is not service
involving the exercise of labour or skill contemplated by this section.11 So, a seller of goods who
keeps the things sold because the price has not been paid does not come within the purview of this
section.12

❖ GENERAL LIEN (SECTION 171)

“Bankers, factories, wharfingers, attorneys of a High Court and policy brokers may, in the absence
of a contract to the contrary, retain as a security for a general balance of account, any goods bailed
to the; but no other persons have a right to retain, as a security for such balance, goods bailed to
them, unless there is an express contract to that effect.”
A general lien is a right of one person to retain any property or goods which are in his possession
belonging to another person until the promise or liability is discharged.
It is a right to retain the property belonging to another for a general balance of the account. A
general lien is available to bankers, factors, attorneys of High Court and policy brokers. Example
of General Lien:
A has two accounts in a bank. In the savings bank account, he has a credit balance of $500.

In the current account, he has an overdraft of $1,000. The bank can exercise the right of lien on the
savings account for the amount due on the current account.

9
Judah v Emp., 63 Cal 174: AIR 1926 Cal 464.
10
C.L. Canthom & Co. (in Re), 33 Mad 53.

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11
Chanda Mal v Gonde, 60 PR 1885.
12
Parkh v Mackenzie and Co., 1934 Oudh 380.

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 ➢ Who can claim General Lien?
To claim a general lien, the claimant must be either a banker, factor, wharfinger, attorney or policy
broker to whom a general lien is limited by this section.13
➢ Banker’s Lien
Banker’s lien can properly arise only over things which belong to the customer but which are held
by the bank as security. If a thing is in the possession of the bank but the ownership is not in the
customer, then no right of lien can be exercised by the bank.14 A banker has a general lien on the
goods pledged for the purpose of securing payment of other debts of the pledger though the debt for
which, the goods were pledged had been discharged.15
Where a banker has advanced money to another, he has a lien on all securities, which come into his
hands for the amount of his general balance, unless there is an express contract or circumstance to
the contrary.16
The lien contemplated under this section in favour of a bank does not confer on the banker the right
to bring the property to sale. It is simply a possessory lien.17 The concept of banker’s lien is
generally in respect of what are called collaterals i.e., documents, securities, etc. which come into
the hands of the banker that are intended to cover the banker’s claim against the customer.18
➢ Factor’s Lien
The word ‘Factor’ means an agent entrusted with the possession of goods for the purpose of selling
them for his principal. Where a factor for sale claims the right under this section to sell the property
invito domino, it lies upon the factor to prove that there was an agreement between the parties-
either express or to be inferred from the general course of business or from the circumstances
attending the particular consignment- that he should have the power to sell even against the wish of
the owner.19
A factor to whom the goods have been consigned for sale and who has made advances against
them, is not entitled to sell without the consent of the owners. Such a factor is allowed to

13
Bombay Saw Mills (in Re), 13 Bom 314.
14
Chettinad Meracntile Bank Ltd v. PLA Pichamman Achi AIR 1945 Mad 447.
15
Kunhan Mayan v Bank of Madras, 19 Mad 234.
16
Punjab National Bank Ltd. v. Satyapal Virmani, AIR 1956 Punj 118.
17
AIR 1955 Bom 419.

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18
R.K. Agencies Ltd. V Central Bank of India, AIR 1992 Cal 193.
19
Jafferbhoy v Charlesworth, 17 Bom 520, 542; Smart v Saunders, 5 CB 895; De Comas v Prost, 3
Moore OC 9NS)
158 ref.

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maintain a suit for refund of advances before an actual sale of the goods, if he had waited a
reasonable time for the sale to take place in the ordinary course of business, even though the
agreement between the parties was that the advances were to be payable from the sale proceeds.20

➢ Wharfinger’s Lien
A wharfinger is a person who keeps a wharf, a platform in a harbour, on which goods are kept for
purpose of loading or unloading ships under Section 171, a wharfinger in the absence of a contract
to the contrary may retain as a security for a general balance of amount, any goods bailed to it. The
mere fact that a person has a wharf does not make him a wharfinger. A manufacturer possessing a
wharf for receiving goods of his customers will not be entitled to a general lien as a wharfinger.21

➢ Attorney’s Lien
The solicitor’s lien at the High Courts in India is governed exclusively by the law as it existed in
English Courts before the passing of 23 and 24 Vic. Ch. 127 by which that lien was very much
extended. By that law the solicitor had a lien for his costs on any funds or sum of money recovered
for, or which became payable to his client in the suit.22 In India, the lien which the solicitor
possesses over his fees arises either under the law of England in places to which it was applied and,
which was not abrogated by any legislation or under the Contract Act or rules of High Court.23 A
solicitor has, therefore, a common law lien on the fruits of the judgment recovered by his exertions,
for it would be inequitable to give the client the benefit of the solicitor’s labour without paying for
it.24
If a client discharges his attorney, the latter has a lien on the client’s papers for his costs, and he
may object to a change of attorney, except upon the terms of the payment of his costs.25

➢ Policy Brokers

20
Sheikh Mahomad v Oakley, 11 LW 1:55 IC 671.
21
Sections 59 and 61(1) of the Major Port Trusts Act, 1963.
22
Devkabai v Jefferson, 10 Bom 248; Haji Ismail v Rabiabai, 34 Bom 484; Premsukhdas v Bural

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and Pyne, 38 CWN 1031, 1040.
23
AIR 1956 Hyd 65.
24
Metre Cabs Ltd (in re), 1911 2 Ch 557.
25
Basanta v Kusum, 4 CWN 767.

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An agent for the purpose of affecting a policy of marine insurance is called a policy broker. A
policy broker is entitled to have a general lien and can retain insurance amount against his
principle, unless his charges are paid. In M.V.A.L. Quamar v Tasvliris Salvage (International)
Ltd.26, there are two attributes to a maritime lien- (a) a right to a part of the property in the res, and
(b) a privileged claim upon a ship, aircraft or other maritime property in respect of services to, or,
injury caused by that property in the event of the cause of action arises and remains attached.

LANDMARK JUDGMENTS

• Grice v Richardson
The appellants, who traded in Australia, imported three parcels of tea which they sold to the
respondents, who gave their acceptance or promissory notes for the price. The appellants were also
warehousemen, having a bonded warehouse in which they had stored the tea on its importation. On
selling the tea to the respondents, the appellants handed them delivery orders, which stated that the
tea to which it referred was warehoused by the appellants. The delivery orders were subsequently
endorsed by the respondents to W & Co. and entries were made at the warehouse that the tea had
been transferred to the company. Subsequently, W & Co became insolvent and their acceptance and
notes were dishonoured, by which time part of the tea had been delivered to W & Co and part
remained in the warehouse, for which the appellants had not been paid. It was held by the Court
that the appellants as vendors retained their lien in respect of the tea which remained in the
warehouse.
• Eduljee v. Café John Bros.
The seller sold a second hand refrigerator to a buyer for Rs. 120 and it was further agreed that the
seller will put that in order at a cost of Rs. 320. The buyer took the delivery of the refrigerator and
admitted that it was working satisfactorily. Subsequently, two of its parts were delivered to the
seller for further repairs. The seller now refused to deliver it back claiming a lien on them until the
amount originally due had been paid. It was held that once the delivery of the

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26
AIR 2000 SC 2826, 2848.

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refrigerator had been made to the buyer, the right of lien had come to an end and the same could
not be revived by the seller again by getting the possession of those goods.

• Hutton v Car Maintenance

In order to exercise a lien over a car taken in for repair, the fact that labour had been expended in
maintaining the article was not enough to give rise to a lien for charges. What was required was
improvement in the condition of the article.
Sargant J said, “that there could be no lien over a motor car ‘by virtue of the arrangement under
which the owner was to be at liberty to take the car away, and did take the car away, as and when
she pleased. The existence of a lien seems to me to be inconsistent with an arrangement under
which the article is from time to time entirely out of the possession and control of the contractor”.

CONCLUSION

It can be noticed that a bailee has been given several rights to safeguard himself against any fowl
play by the bailor. The most important of these rights is the right of lien which can be exercised by
several different kinds of bailees in different kinds of bailments.
Lien is a possessory right and can only be exercised when the bailee is in the possession of the
goods. There is also a condition that some skill must have been exercised on the article or good and
there must be an improvement in the condition of the good or article.
Therefore, we can see that the right of lien is not an absolute right and that there are certain
limitations which are imposed on the exercise of this right like that the bailee cannot sell the goods
or that the right can only be exercised when the bailee is in possession of the goods.

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BIBLIOGRAPHY

• https://indiankanoon.org/doc/842195/
• https://lawschoolnotes.wordpress.com/tag/eduljee-v-cafe-john-bros/
• https://swarb.co.uk/hatton-v-car-maintenance-co-ltd-1915/
• https://www.srdlawnotes.com/2017/06/bailment-rights-of-bailee.html

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