More on “Time Is of the Essence”

Drafters use the phrase time is of the essence to indicate that failure to meet a contract deadline constitutes grounds for termination. But as I explain in MSCD 12.394–403 and in this May 2006 blog post, saying Time is of the essence for purposes of this agreement is problematic, in that such provisions suggest that the draconian termination-for-any-tardiness standard applies to all contract promises, of whatever nature and no matter how trivial. That’s why courts are willing to ignore such provisions and instead regard tardiness as constituting breach, with damages to be assessed based on the harm caused by the breach.

Given my interest in time is of the essence, I was pleased to have Phil Scheibel, a partner at the Calgary office of Fraser Milner Casgrain, sent me a link to his recent article on the implications of time is of the essence for purposes of construction contracts.

Phil makes the same point I do, but he also notes that delay is often expected in construction projects, and that construction contracts routinely address delay by means of liquidated-damages provisions and express termination provisions. Such specific provisions should override a generic time is of the essence provision.

Phil also notes that whereas termination for any tardiness may make sense when something is being sold, a missed deadline in a construction project may occur after substantial performance—allowing the other party to terminate could result in unjust enrichment.

These arguments bolster my aversion to time is of the essence. You want to be able to terminate without any discussion of harms if the other party misses a deadline? Then you’d be much better off saying so clearly instead of relying on jargon.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.

6 thoughts on “More on “Time Is of the Essence””

  1. I think the point is that “time is of the essence” clauses have become boilerplate; lawyers seem to throw it in every contract. Perhaps it should be reserved for those cases where time really IS of the essence. When we bought our house several years ago, the contract had a closing date in it. We planned many things around that date, including the arrival of furniture from storage and starting the kids in their new school. About three days before closing we were told that the sellers weren’t going to close until five days after the specified date – they had unilaterally decided to extend! “Wait!” we said, “Our contract has a specific closing date indentified. How can they do that?” “Well,” our lawyer said, “we did not stipulate in the contract that ‘time is of the essence,’ so under Connecticut law they can postpone the closing a few days and still be in substantial compliance.” After that, I’ve been both sensitive tot and judicious about the use of the clause; I always try to make sure it is understood WHY time is of the essence. In used aircraft purchase deals, for instance, where we strive hard to ensure fixed dates so as to coordinate the many post-closing activities (e.g., it’s expensive to reserve a parking place for an airplane), we use the clause to make sure sellers appreciate how important it is to meet specific date commitments.


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