What does time is of the essence mean?
What is the significance of time is of the essence clause in a contract?
What are some examples?
In this article, we will break down the notion of “time is of the essence” so you know all there is to know about it.
We will first look at what it means, its legal definition, the different variations of the phrase, how time is of the essence clause is used in contracts, its enforceability and more.
By the time you’re done reading this post, you’ll be quite knowledgeable of what it means.
Are you ready?
Let’s get started!
Table of Contents
Time is of the essence
Let’s start by understanding what the phrase “time is of the essence” means.
What does time is of the essence mean?
Time is of the essence is a term used to indicate that the performance of certain contractual obligations is time-sensitive and failure of which a party may suffer damages.
“Time of the essence” means “this is very important” “this is essential”, “this is time-sensitive”.
When using the time is of the essence clause, the timelines and delays provided for in the contract are considered essential and failure to respect them is considered to be a material breach of contract.
Definition
According to Dictionary.com, time is of the essence is defined as:
“when something must be done immediately: “The doctors need to operate right now; if they hope to save her, time is of the essence.”
The Cambridge Dictionary’s definition of time is of the essence is as follows:
“said to encourage someone to hurry”
As you can see from the definition, time is of the essence refers to a sense of urgency in time.
Variations
The phrase time is of the essence can be used in various ways such as:
- Time-is-of-the-essence
- In the essence of time
- Essence of time
- Time of the essence
- Time of essence
No matter how it is formulated, the meaning of the phrase remains the same: it is crucial that something is done within a certain timeline.
What is time is of the essence clause?
In contract law, when using a “time is of the essence clause”, the author of the contract intends to ensure that the performance of the other party’s obligation is completed by a certain date without which the other party will be in a material breach of contract.
Crucial deadlines
Contract professionals and lawyers should be careful about how they use the time of the essence clause in a contract.
If certain obligations must be performed by a certain date, the best practice is to clearly stipulate the deadline in the contract.
When a party’s consideration in a contract is linked to the timely delivery of a service, a product or obligations, a non-breaching party can easily prove in court that there has been a material breach of contract.
Non-crucial deadlines
Where the time is of the essence clause can be useful is when referring to non-crucial deadlines or delays that are considered minor in importance.
When dealing with the performance of an aspect of a contractual obligation objectively minor in importance, a contractual party may elevate its importance by using the time is of the essence clause.
In other words, by stipulating a deadline, even for an objectively minor obligation in the grand scheme of things, and using time is of the essence clause to express the intention that the deadline is crucial, a contracting party can invoke a material breach should that deadline is not observed.
This does not automatically mean that the courts will consider a minor breach to be a material breach on the basis of the “time is of the essence clause” but it certainly gives a party the ability to invoke such a position in court.
At the end of the day, the court will consider the terms of the contract along with the overall circumstances of the case and the behaviour of the party to enforce the time is of the essence clause.
In many contracts, The time is of the essence clause is used as a “catch-all” clause to indicate that if the other party fails to perform within the state period, that party will be in breach of contract.
Time is of the essence vs express clause
A contract can expressly define that a specific obligation must be performed by a certain date for a party to avoid a breach.
This is considered to be an express clause providing for a timeline in a contract.
For example, a party may stipulate the following in a contract:
“The service provider shall complete the development of the software by no later than August 1st failure of which the client shall have no obligation to take delivery of the software and may terminate the present agreement for cause”
In this express clause, the client has clearly stipulated that if the service provider does not deliver by a certain date, the client will have no obligation towards the service provider and can even terminate the contract for breach.
If the time is of the essence wording is used in conjunction with a specific date, then it leaves no ambiguity that the deadline is crucial and cannot be missed.
Time is of the essence vs reasonable time
A contracting party may want to give additional importance to the delays provided for in a contract.
That’s when you use the expression time is of the essence.
For example, the parties can stipulate something like this in a contract:
“The parties agree that the work product shall be made available to the client for testing within two months from the execution of the present agreement and acknowledge that time is of the essence”
In some cases, you may not define a specific timeline or deadline to perform certain obligations but you want to make sure that the concept of time remains important.
That’s when you can use the “reasonable time” expression or something similar.
For example, a clause can read something like this:
“Following an event of force majeure, the parties shall resume their contractual obligations in a commercially reasonable timeline”
In this case, the parties are not stipulating the exact time but are ensuring that the services are resumed as soon as possible when the event of force majeure is over.
Enforceability of the “time is of the essence” clause
To the surprise of many, not all delays in a contract can be considered as material by a court.
Contractual delays
If a party does not respect certain delays in a contract, a court may not automatically consider that there was a material breach of contract justifying breach of contract remedies.
In many contracts like sales contracts, loan agreements, real estate transactions or other types of contracts, the courts may not consider the timing of the performance of all obligations to be essential unless it is stipulated otherwise.
Enforceable clause
To ensure that the other party is made aware that the timely performance of the contractual obligations is crucial, time is of the essence clause should be used.
With a “time is of the essence” clause, the court will interpret the contract in such a way to give more importance to the contractual deadlines and enforce it against the breaching party.
For example, if a general contractor is bound to deliver the construction of a commercial property by a very specific date, the contractor must ensure that its subcontractors respect their contractual deadlines as well.
This way, the performance of the electrician’s obligation will have time sensitivity.
The general contractor may include a time is of the essence clause in the electrician’s service contract to ensure that the work is delivered and completed on time.
The general contractor will make it clear to the electrician that his or her delay can result in the general contractor to be in breach of its obligations with the end client, therefore, time is of the essence to get the job done on time.
If the electrician fails to perform its obligations on time, the court will enforce the time is of the essence clause and consider the electrician to be in a material breach of the contract.
Exceptions
In some cases, the time is of the essence clause may not be easily enforceable depending on the contractual wording and the circumstances.
If the parties entered into a complex obligation without specifying any timeline in the contract and merely included a time is of the essence clause as a “catch-all” clause, the courts may have more difficulty enforcing it.
For example, a catch-all clause can be drafted in the following way:
“Time is of the essence with respect to the performance of all obligations under this agreement”
If a party misses a deadline, the courts generally expect for the breaching party to be notified and given a chance to promptly cure the breach.
If a non-breaching party uses a general time is of essence provision to immediately put another contracting party in default, the courts may not necessarily enforce the clause very strictly.
On the other hand, time is of the essence clause used in conjunction with a specific deadline will have more chances to be enforced, such as:
“The parties agree that the service provider shall deliver the project by no later than August 1st and acknowledges that time is of the essence representing an essential consideration for the client”
In this example, the time of the essence clause is used along with a specific deadline conveying a strong and clear message that if the deadline is missed, it will be considered a material breach of contract.
Time is of the essence examples
In law, the phrase time is of the essence is commonly used in contracts.
Purchase of goods contract
For example, in a contract for the sale of a good, the delivery date is generally crucial for the client.
As a result, a purchaser may clearly stipulate that the delivery of the merchandise or goods will be of the essence.
Here is an example:
“The vendor shall deliver the merchandise to the buyer within two months from the execution of the present agreement. The parties acknowledge that time is of the essence for the delivery of the merchandise failure of which the buyer may cancel the contract.”
In other words, failure to meet the delivery date will result in a breach of contract.
Real estate contract
The time to perform certain obligations in a real estate contract is not necessarily considered time-sensitive or material by the courts unless stipulated otherwise by the parties.
In other words, the parties to a real estate contract who want to give significance to the accomplishment of certain obligations by a certain date must expressly stipulate it in their contract.
If the contract does not expressly stipulate that time is of the essence, the courts will consider a “reasonable timeline” to be good enough to perform the obligations.
As an example, you can stipulate a clause as follows:
“The parties hereby agree that the closing of the present real estate transaction shall take place on or before August 1st where such delay is of the essence and shall not be postponed”
In this example, the parties clearly intend to give significance to the closing date.
Without such a statement, the closing date of August 1st will not be expressly imposed but the parties should close the transaction on or around that time.
Frequently asked questions
What is the meaning of “time is of the essence”?
Time is of the essence means that something has to be done immediately or within a certain dealy.
It’s to stress the fact that a deadline cannot be missed or action has to happen.
For example, we can use the term “time is of the essence” in the following way:
“Following a heart attack, time is of the essence to treat the person”
This means that it is essential to act quickly.
Is time is of the essence a legal term?
The term “time is of the essence” is used in the English language to indicate that something needs to be done immediately.
The expression is also used in law to refer to a task or obligation that must be performed by a certain date.
If the contractual deadline is missed, then the party missing the deadline will be considered in breach of contract.
