What is the meaning of Time of the Essence in Contract Provisions?

By The Law Office of Yoel Molina.
 
It is common for parties to a contract to stress that "time is of the essence." In the event that something goes wrong with the contract, what does this paragraph mean and will a court always uphold a "time is of the essence" clause?
 
Why Do We Need Language That Says "Time Is of The Essence"?
Like the White Rabbit in Alice in Wonderland, you can be running late for a crucial date if the other party to a contract doesn't fulfill its duties on time. It can come as a surprise to the parties to a contract to realize that missing a deadline is not always considered a substantial breach of the agreement.
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Courts frequently do not view timing as being crucial when it comes to many different sorts of contracts, such as construction, real estate transactions, loans, or other non-goods contracts. They think that minor schedule changes aren't significant enough to merit financial penalties or contract termination. The parties, however, would argue otherwise in some situations. For instance, if the lender's failure to finance the loan on time prevents you from purchasing a home or pursuing a potential business opportunity, the timing of a loan contract may be quite crucial. Because of this, lawyers started including clauses in contracts that state that "time is of the essence." A clause that expressly states: "Time is of the importance with respect to all [obligations/deliveries/payments] under this Agreement" might be included in a contract if a party wants to ensure that it is apparent that it is crucial that the contract obligations be fulfilled on time.
 
Do "Time is of the Essence" Provisions Have to Be Followed?
A party's failure to comply with the requirements of a "time is of the essence" provision constitutes a substantial breach of the contract, according to the contemporary view accepted by most courts. Alternatively, if this wording is omitted, the majority of judges will not view the date as being important.
 
Provisions for "Time is of the Essence" Sales of Goods:
Courts hold delivery dates to be crucial in contracts for the sale of commodities. Even in the absence of a "time is of the essence" clause, a seller's failure to meet a delivery deadline is typically seen as a major breach of the contract. However, when it comes to the deadline for making the payment for the items, that is not the case. Due to the fact that late payment may always be addressed by adding interest to the amount owed, courts offer the parties more latitude to miss payment deadlines.

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If you have any questions about this article or similar matters, please contact our office, the Law Office of Yoel Molina, P.A., at fd@molawoffice.com or 305-548-5020, option