What Is Time Of The Essence Contract Clause?

What Is Time Of The Essence Contract Clause?

22 Apr What Is Time Of The Essence Contract Clause?

The “time is of the essence” is a common contract clause found in contractual agreements where one party is performing work for another party. The party constructing the contract will usually add this clause within the contract to hold the other party liable if for some reason the contract obligation is not full-filled within a specified period of time.

This contract clause is very common within construction contracts where deadlines and other tasks are required to get completed upon time. However, when using the time of the essence clause in a construction contract make sure that if you specify a date that it is reasonable and achievable by the other party.

When you use the time of the essence contract clause and specify a date the other party will try to keep it stated as a reasonable period of time. However, for your best interest you should try to stick to a date or a series of dates especially for construction contracts where there are multiple phases that are required to complete the job. Don’t settle for “reasonable amount of time” in the clause because this will be hard to define in a court.

Also, if the other party to a contract wants to change the time of the essence clause you may want to ask them why they can’t meet your timelines. When drafting a contract be specific on all your clauses and don’t just settle for generalization. If you use general clauses in your contract it will be hard for courts to interpret exactly what you mean.

The time of the essence clause is often overlooked by other contractual partners. So be sure to include it in a contract where performance is critical along with specified deadlines. This way you have the power to enforce the contract if the party performing the contract is taking too long or not performing up to the standards you have in the contract.

Also, the time of the essence clause plays an important part in collecting liquidated damages when performance of the contract is not met. For each phase and deadline you have in the contract you should attach a monetary value that the other party must pay you if they don’t meet that deadline.

As the drafter of the contract you should write it to be more favorable to you and negotiate the terms so that the other party can perform its obligations. With contract clauses you can negotiate just about any conditions that you see fit as long as it doesn’t handcuff yourself or the other party.


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