Time of Essence Clause

Time of Essence Clause Defined

Time of essence clauses refer to the amount of time by which parties to a contract have to complete their contractual obligations to the other party. Not meeting these deadlines can result in a breach of contract claim against the tortfeasor.

Here’s an article that explains the time of essence clauses.

Time of Essence Clause Explained

Time of essence clauses are critical for emphasizing the need for timely delivery of products or services. Since one party depends upon the contracting party to deliver on time, they must have a way of protecting themselves if a breach of contract occurs.

This page also explains time of essence clauses.

Purpose of Time of Essence Clause

The purpose of time of essence clauses is to act as a safeguard. If one contractually obligated party doesn’t perform its duties, then the aggrieved party needs compensation for their losses associated with the missed deadline. The aggrieved individual then has the right to file a claim against the other.

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Time of Essence Clause Examples

Examples of time of essence clauses include:

• Example 1. Web design companies delivering before product launches
• Example 2. Construction companies completing work before a grand opening
• Example 3. Overnight delivery couriers delivering packages on time
• Example 4. Authors completing books in advance of their release dates
• Example 5. Real estate sellers completing work before market fluctuations

Time of Essence Clause Samples

Sample 1 – Master Development and Supply Agreement

On-Time Delivery. TIME IS OF THE ESSENCE as to the delivery of the Goods under this Agreement. If Supplier cannot meet the requirements of the then current Forecast or of the delivery date specified in a Purchase Order, Supplier will promptly notify the Authorized Purchaser and propose a revised delivery date, and the Authorized Purchaser may, at its option: (i) [*****] the Purchase Order [*****] to Supplier; or (ii) require Supplier to deliver the Goods using priority freight delivery with incremental freight charges at [*****] expense. If neither the remedy in clause (i) or (ii) is sufficient, after reasonable efforts to resolve the delay in delivery between senior management of both parties, the parties agree that Authorized Purchaser may purchase substitute goods [*****] of the Goods and [*****] by Authorized Purchasers [*****], if higher, including [*****] and may exercise all other remedies provided at law, in equity and in this Agreement, including the right of specific performance or replevin as set forth in Section 2.716 of the Uniform Commercial Code. No Authorized Purchaser is obligated to accept early delivery of Goods. Unless an Authorized Purchaser has otherwise agreed in writing, Supplier must deliver the exact quantity specified in the applicable Purchase Order. Authorized Purchasers reserve the right to reject any partial or incomplete delivery and to return excess quantities at [*****] expense and risk.

Reference:

Security Exchange Commission - Edgar Database, EX-10.13 5 d229773dex1013.htm MASTER DEVELOPMENT AND SUPPLY AGREEMENT, Viewed May 10, 2021, < https://www.sec.gov/Archives/edgar/data/1201663/000119312512187329/d229773dex1013.htm >.

Sample 2 – General Agreement

Time of the Essence. With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence.

Reference:

Security Exchange Commission - Edgar Database, EX-2.1 2 a20188-kfsboagreement.htm EXHIBIT 2.1, Viewed May 10, 2021, < https://www.sec.gov/Archives/edgar/data/1593195/000159319518000040/a20188-kfsboagreement.htm >.

Sample 3 – Agreement and Plan of Merger

Time of Essence. With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence.

Reference:

Security Exchange Commission - Edgar Database, EX-2.1 2 d328340dex21.htm AGREEMENT AND PLAN OF MERGER, Viewed May 10, 2021, < https://www.sec.gov/Archives/edgar/data/719220/000119312512147653/d328340dex21.htm >.

Common Contracts with Time of Essence Clauses

Common contracts with time of essence clauses include:

• Construction contracts
• Real estate contracts
• Sales contracts
• Independent contractor agreements
• Entertainment contracts
• Quitclaim deeds
• Deed of trust

Time of Essence Clause FAQs

Time of essence clauses offer special protections to buyers and sellers. Here are a few time of essence clause FAQs for more information:

Are Time of Essence clauses enforceable?

Time of essence clauses are enforceable in most courts. Check with your state laws or contract lawyers for specific legal advice.

What happens if a sale contract has a time is of the essence clause and one of the principals misses a deadline?

If a principal misses a deadline while a time of essence clause is in place, you can file a civil breach of contract claim against them.

Depending upon your situation, a construction lawyer or real estate lawyers can provide legal advice and guidance when handling time of essence clauses.