I was wondering about the phrase "time is of the essence". This compares to other time constraints such as "reasonable time" and "time at large."

My understanding of "time is of the essence" suggests that all the deadlines set forth in the contract must be met, that ordinarily, extensions will not be allowed. Is this a correct understanding?

Can "time is of the essence" be inferred from surrounding circumstances, even though it was not "stated" in the contract? For instance, if a "recital" to a contract said that one party needed to complete the deal by December 31, in order to obtain a tax advantage (or avoid a tax loss), would that imply "time is of the essence?

2 Answers 2


Can "time is of the essence" be inferred from surrounding circumstances, even though it was not "stated" in the contract?

Yes, but the key is --as you say-- the surrounding circumstances.

If failure to timely perform the contractual act or duty at issue causes harm, then that failure would merit the granting of a recovery award. By contrast, a delay or failure that is inconsequential would not lead to a viable claim of breach of contract.

Inconsequential failures or delays would not be actionable even if the contract explicit contains the phrase "time is of the essence" or akin thereto.


That is not what time is of the essence means

If a contract has a time by which something must be done and it isn’t done by that time, then that is a breach of a condition of the contract and the innocent party can claim damages. They cannot terminate the contract unless the breach is of a term rather than a warranty. Whether a condition is a term or a warranty depends on the essentialness of the condition and the egregiousness of the breach.

For example, if a building contract says I will pay you on 1 October 2018 and I don’t pay until 30 November 2018 you can sue for damages but you can’t terminate the contract. If it is now 30 November 2019 the breach is probably egregious enough that you can terminate.

“Time is of the Essence” explicitly makes the specified times a term of the contract rather than a warranty. Any breach therefore allows termination.


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