If you are involved in reviewing or negotiating contracts you are likely to have come across the expression “time is of the essence” but what does it actually mean?   

General rule

If a supplier has committed to a delivery date in a contract and fails to deliver on that date then, unless there are extenuating circumstances, the supplier will be in breach of contract. However, as a general rule, the courts will not treat such a breach as sufficiently fundamental to create a right for the customer to terminate the contract. Instead their sole remedy will ordinarily be to claim compensation (also called “damages”) for the losses which they have suffered that flow from that breach.    

If however the contract states that “time is of the essence” with respect to any particular delivery obligation (or indeed sometimes all delivery obligations) then this changes the remedies available to the customer. If the supplier fails to deliver in this situation, the customer would have the right to terminate the contract immediately without notice and claim compensation.  

Practical advice

If you are a customer, we would advise including these words for important deliveries. If you can get away with it you may even want to try making “time of the essence” for all delivery times set out in the contract.   

Suppliers should where possible avoid giving a “time is of the essence” commitment unless you are absolutely certain that you can deliver to the time specified and delivery is 100% within your control.

It is worth noting that there are other ways of achieving the same effect in contracts such as for example making it expressly clear in a contract that failure to deliver by a certain date will give the customer a right to terminate the contract for breach.

If you believe another party to a contract is in breach of contract, then it is essential to act promptly and we would advise that you seek legal advice. Otherwise there is a risk that failure to take action or inappropriate action will constitute a waiver of your rights to claim compensation or to terminate the contract or otherwise prejudice your rights. 

If you any questions about issues raised in this update please contact Stephen Thomas on 01242 225586 or by email on steve.thomas@maitlandwalker.com

As this information has been prepared by Maitland Walker Solicitors as a general guide, we recommend you seek specific professional advice before acting on any information contained within it.  No liability can be accepted by Maitland Walker for any action taken or not taken as a result of this information. 

Maitland Walker is regulated by the Solicitors Regulation Authority.