Time - Building Contract Claims - page 16

Chapter 2
Time
2.1 Time of the essence
A term, the breach of which by one party gives the other party a right to
treat it as repudiatory, is sometimes said to be of the essence of the contract.
At one time the common law took a strict view with the result that a contract
had to be performed on the date stated, the only relief being obtained
through the Court of Equity. However, for three quarters of a century,
time has not been automatically considered as of the essence of a contract
unless Equity would have so considered it prior to 1875 39 . There are prob-
ably only three instances where time will be of the essence:
. If the contract expressly so stipulates
. If it is a necessary implication of the contract and its surrounding circum-
stances
. If a party unreasonably delays his performance, time may be made 'of the
essence' if the other party serves a notice on the party in breach setting a
new and reasonable date for completion.
It must be a term so fundamental that its breach would render the contract
valueless, or nearly so, to the other party. It is noteworthy that where a term
is not originally of the essence it may be made of the essence by one party
giving the other a written notice to that effect 40 . In that case, failure to
comply with the notice would be evidence of a repudiatory breach rather
than a repudiatory breach itself. This may be of limited use in cases where a
contractor consistently fails to meet time targets for reasons which do not
entitle him to an extension of time under the contract provisions. However,
in the case of most standard form building contracts, the provisions
for determination (e.g. for failure to proceed regularly and diligently)
adequately cover the situation.
There is authority that time will not normally be of the essence in building
contracts unless expressly stated to be so. This is because the contract makes
express provision for the situation if the contract period is exceeded in the
shape of an extension of time clause and liquidated damages 41 . In that
context, making time of the essence would be contradictory and little or
no practical benefit to the employer although it was done in Peak Construc-
tion (Liverpool) Ltd v. McKinney Foundations Ltd and apparently gave the
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