Long ago I examined the phrase time is of the essence and found it wanting. MSCD has the definitive account, but there’s also this 2009 blog post.
But at a recent seminar, someone reminded me that the phrase of the essence is used not only in time is of the essence.
That’s something that MSCD 13.687–88 refers to:
A fixture of contract language is the phrase of the essence. According to Black’s Law Dictionary, it means “so important that if the requirement is not met, the promisor will be held to have breached the contract and a rescission by the promisee will be justified.”
It’s used in provisions such as the following: Tenant’s surrender of the Surrender Premises on the Surrender Date is of the essence. But mostly it’s used in the phrase time is of the essence.
But I thought I should look more closely at this broader use of of the essence.
First, here are some more examples:
This Section 7.13 is of the essence of this Agreement and the Trust would not have entered into this Agreement without this Section 7.13.
The assembling, delivery, storage and transporting of the Units as hereinbefore provided are of the essence of this Lease, and, upon application to any court of equity having jurisdiction on the premises, the Lessor shall be entitled to a decree against the Lessee requiring specific performance thereof.
It is agreed among each Guarantor, the Agent and the Funds that the foregoing waivers are of the essence of the transaction contemplated by this Non-Recourse Guaranty and the other Fund Documents and that, but for the provisions of this Section 2.1 and such waivers, the Agent and the Funds would decline to enter into the Contribution Deferral Agreement or any other Fund Document.
And here’s a relevant extract from Am. Jur. 2d, Contracts:
A party is not automatically excused from the future performance of contract obligations every time the other party commits a breach; if a breach is relatively minor and not of the essence, the plaintiff is still bound by the contract and may not abandon performance and obtain damages for a total breach by the defendant, though the nonbreaching party is entitled to damages caused even by the immaterial breach, albeit that these may be nominal in amount.
That explanation is consistent with the Black’s Law Dictionary explanation that I quote in MSCD. But that doesn’t mean that it’s a good idea to use of the essence. Because of the essence is jargon, you can’t expect everyone to know what you’re trying to say when you use of the essence. It would be much clearer to use instead a termination provision to express the intended meaning. Rather than simply provide for termination on material breach of an obligation, you could supplement that by having the parties acknowledge that breach of specified sections constitute material breach.