Tom Perkins

Attorney at Law 

Time is of the Essence (April 2020)

Like the Styx hit, it seems like we all have too much time on our hands. During this nationwide exercise in remotely working, there is probably no more poignant reflection of the perceived abundance of time than the contractual provision stating, “Time is of the essence.” This is another legal clause that has been relegated to the basement of contract boilerplate, but may now be ascending that long dark staircase to gain the focus of attention. Unlike certain other provisions that are specifically defined by the contract itself, a requirement that “time is of the essence” has a well-settled meaning. As stated in Black’s Law Dictionary (9th Ed.), a provision that time is “of the essence” means that any deadlines stated in the contract are “so important that if the requirement is not met, the promisor will be held to have breached the contract and a rescission by the promise will be justified.” In simple terms, failure to meet the time requirements of the contract would be considered an automatic breach. An example of this would be a contract requiring delivery of materials by 5:00 pm on the second Monday of the month, and “time is of the essence.” If the delivery is not made by that time on that day, then the provider of the materials would be in breach of the contract. When so many contract provisions can include nuance or gray area, this is intended to be binary. It is either on time or it is not. If a timing requirement is missed, an understanding of “rescission” becomes important. A contract subject to rescission means that one party can “undo” the contract completely. The parties would, as close as possible, be restored to their relative positions prior to the contract itself. Any other contract remedies would also be preserved related to damages from the breach. During this national emergency, much of our service infrastructure is strained. There are stay-at-home orders, definitions of “essential,” and employees working remotely. These inefficiencies are the cost of protecting our country from this pandemic. But these structural inefficiencies also mean that deadlines are being missed, contract timeframes are being ignored, and it is unclear how many of the contract provisions will be excused due to executive orders. A legal professional with experience in litigation, business operations and transactions is best suited to review the contract provisions that form the foundation of your business relationships.


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