Time Is of the Essence

What does "Time is of the essence" mean?

Missing a contractual deadline does not always constitute a breach of contract. There are situations, however, when it does cause material harm to a party if the other party is late in completing their task. A supplier for a car manufacturer may be late in producing the required parts on time if raw materials do not arrive on time. This can lead to the supplier getting into trouble with their client, the car manufacturer. In order to reflect the fact that timely completion of the task in the contract is important you can use a time is of the essence clause to reflect that fact.

One way to implement such a clause would be: “Time is of the essence with respect to all [obligations/deliveries/payments] under this Agreement.”

Enforcement in court

In most cases missing a deadline with a time is of the essence clause included in the contract is interpreted as a material breach of the contract. In turn, many courts do not consider it such without time is of the essence language. It should be noted that a court can ignore these clauses if it deems the deadline to be unfair towards the contractor. Also, a court can grant the breaching party time to fix the breach.