Section 54 - Effect of default as to that promise which should be first performed, in contract consisting of reciprocal promises

Section 54: Default in Reciprocal Promises Means No Performance Claim, Defaulting Party Must Compensate for Losses.

Section 54 of the Indian Contract Act, 1872, addresses the effect of default in contracts with reciprocal promises. When one promise must be performed before the other, and the promisor of the initial promise fails to perform, they cannot demand the performance of the reciprocal promise. The defaulting party must compensate the other party for any resulting loss. For example, if a party fails to provide cargo for a hired ship, they cannot claim the ship's services and must compensate the ship owner. Similarly, if scaffolding is not provided for construction, the builder is not obligated to perform and must be compensated for losses.