Time of the essence

by Practical Law Commercial

A boilerplate time of the essence clause providing alternative wordings to make time of the essence for contractual obligations in a commercial agreement. The clause establishes that any delay in performing a specified duty, such as payment or delivery, is repudiatory, giving the aggrieved party the right to terminate the contract instantly. If used to make time of the essence for exercising a right, the right is lost if not exercised in time. This resource offers several drafting options, allowing parties to make time of the essence for a single obligation, for multiple specified deadlines, or for all time-related obligations within an agreement. The accompanying notes provide guidance on the suitability of these clauses for different types of agreements and the legal consequences of using this language, including its effect on damages for loss caused by early termination. They address critical drafting considerations, such as ensuring deadlines are clearly defined and avoiding conflicts with other termination provisions in the contract.