“Of the Essence” (Without “Time Is”)

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.

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.

5 thoughts on ““Of the Essence” (Without “Time Is”)”

  1. I think if I wanted to avoid “of the essence” (and I agree it’s a bit jargony), I would probably refer to “rescission” rather than use the termination provisions. Unless you have an unusual termination clause, the effects of rescission and termination are quite different (and not all contracts have termination provisions in any case).

    You could set out in the contract exactly what happens in unwinding the contract (i.e. synthesise rescission contractually), but that unnecessary and riskier. Rescission is a technical term, but I think it’s unambiguous and can be explained to any client. Further, trying to write it into the contract also increases the uncertainty over how it will be implemented, because you presumably won’t be relying on the existing legal understanding of “rescission”.

  2. 1/ I like “of the essence” for its concision. It’s like “to effect” in “if the plaintiff prosecutes the action to effect, then this bond shall be void, otherwise in force.” The jargony air about it is a small price to pay to avoid all the laborious periphrasis alternatives require.

    2/ If the phrase is unfamiliar to laypersons, a short definition will do: “‘Of the essence’ means a breach of an obligation so designated is material.”

    3/ Not sure why the remedy of rescission would be preferable to those available on total breach, but in some situations, it may be so, and should then be specified.

  3. Ken:

    I agree. I dislike “of the essence” because it contemplates that there are potential remedies that the parties are actively intending beyond those on the face of the contract. I would prefer the termination provisions in the agreement to be the exclusive methods of ending the agreement. If I wanted rescission to be a remedy, I would want to explicitly spell out when that remedy is available, because it is usually a difficult remedy to administer, well beyond termination. I’ve seen negotiators throw “of the essence” around a lot without thinking through what the practical consequences would be.
    And if a contract is using “of the essence” just to designate a provision or its breach as material, regardless of the facts, then simply saying “this provision is material” would be a lot better, in part because it opens up better opportunities for specificity, like “breach of this provision is material under the following conditions.”

  4. Ken,

    What if the provision is material, but the intention is not for a breach to constitute grounds for rescission but a clear result instead? The provision that comes to mind is a jury waiver/bench trial provision. That might be a provision that specifies that is is “of the essence” or a material inducement for entering into the contract. I doubt there is any intention to annual the contract in the case of a dispute over how much a fee is affected by a CPI adjustment, but it might be a clear indication that both parties felt that this was such an important provision that they would not have entered into the contract but for it and therefore no party is allowed to insist on settling such dispute with a jury trial.

    Thoughts? I might not be articulating my point clearly enough.


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