Terms to Know: Time is of the Essence
Often, contracts contain deadlines for performance – delivery, payment, closing, etc. What happens when the time for performance comes and goes?
If the contract contains the words “time is of the essence,” it means meeting the deadline is essential and required in the contract. If this clause is in the contract, there is no leeway for performance and the non-performing party is in breach if they miss the date stated in the contract.
If there is no ‘time is of the essence’ clause, the party has a “reasonable” time to perform. What is reasonable is often hard to determine, and will depend on the complexity of the transaction, customs in that particular industry, history between the parties, and other facts.