Civil Engineering Reference
In-Depth Information
contracts?
Time is 'of the essence' when any breach of stipulations about time in a contract can be
treated as repudiatory so as to entitle the other party to terminate performance of its obliga-
tions and claim damages. There are probably only three instances where time will be of the
essence:
•
•
•
if it specifically states in the contract that time is of the essence;
if time being of the essence is a necessary implication;
ifonepartyisindelaytoanunreasonableextent,timemaybemadeoftheessenceifthe
other party serves a notice on the party in breach setting a new and reasonable date for
completion.
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The term must be so fundamental that a failure to comply would make the contract almost
worthless so far as the other party was concerned. If a shop orders goods for sale to meet a
particular demand, for example, and that demand is known to the supplier, failure to meet
the required delivery date might, depending on all the circumstances, amount to a breach of
an essential term.
Time will not normally be of the essence in building contracts unless expressly stated to
be so. The reason is that the contract makes express provision, in the form of an extension
of time clause and liquidated damages, for the situation if the contract period is exceeded.
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Therefore, it would be nonsense to make time of the essence: One term would be to the
effectthatfailure tocomplete bytheduedatewouldentitle theotherpartytoaccept thefail-
ure as repudiation, while the other term would allow the contractor to an extension of time
forappropriatereasons.Timewasmadeoftheessencein
Peak Construction (Liverpool) Ltd
ine the contract at the end of' the period as extended by the architect. In the case of most
building contracts, the provisions for termination (e.g. for failure to proceed regularly and
diligently) adequately cover the situation.
