Time is of the essence: Overview, definition and example
What does "time is of the essence" mean?
"Time is of the essence" is a legal phrase used in contracts to stress that deadlines are critical and must be strictly followed. If a party fails to meet a specified deadline, it can be considered a breach of contract, even if the delay seems minor.
For example, if a delivery contract states that "time is of the essence" and goods arrive late, the buyer can refuse the delivery or take legal action for the breach.
Why is "time is of the essence" important?
This clause is important because it makes clear that timelines in a contract are not just guidelines—they are enforceable requirements. It protects parties who rely on timely performance to avoid losses or disruptions.
In business, such clauses are often included in contracts where delays could have significant financial or operational consequences, like construction projects, product deliveries, or real estate transactions.
Understanding "time is of the essence" through an example
Imagine a construction company agrees to complete a project by a specific date for a retail client’s grand opening. The contract states that "time is of the essence." If the construction is delayed and the opening is missed, the retail client could claim damages for lost revenue because the timeline was a critical part of the agreement.
In another case, a supplier agrees to deliver raw materials by the 15th of each month. If the contract includes "time is of the essence" and the delivery is late, the buyer could cancel the contract and purchase materials elsewhere, holding the supplier liable for any additional costs.
An example of a "time is of the essence" clause
Here’s how this clause might look in a contract:
“Time is of the essence with respect to all dates and timelines set forth in this Agreement. Failure to meet such deadlines shall constitute a material breach of this Agreement.”
Conclusion
"Time is of the essence" emphasizes that deadlines in a contract are non-negotiable and critical to the agreement. It holds parties accountable for timely performance, helping avoid costly delays or misunderstandings.
By understanding this clause, businesses can ensure they meet important deadlines and protect themselves from disputes or breaches tied to missed timelines. It’s about prioritizing time as a key element of the deal.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.