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Can You Unilaterally Make Time of the Essence in a Contract?

In the realm of contract law, the phrase “time is of the essence” signifies that timely performance is a crucial requirement of the agreement. But what if the contract initially doesn’t make time a critical factor? Can one party unilaterally make time of the essence? Let’s explore this question and its implications.

Understanding “Time of the Essence”

When a contract states that “time is of the essence,” it means that any delay in performing the contract constitutes a breach, potentially allowing the aggrieved party to terminate the contract and seek damages. This clause is typically agreed upon at the contract’s outset, highlighting the critical nature of timely performance.

Can Time Be Made of the Essence Unilaterally?

Generally, one party cannot unilaterally make time of the essence if it wasn’t initially specified in the contract. However, circumstances can arise where time can effectively become of the essence, even if not originally stated:

1. Notice to Perform:
– If one party has delayed performance, the non-breaching party may issue a “notice to perform,” setting a reasonable deadline to fulfill the obligations.
– This notice should explicitly state that failure to meet the new deadline will make time of the essence, and any further delay will be deemed a breach of contract.

2. Reasonableness:
– The deadline set in the notice must be reasonable, considering the circumstances and the nature of the contract. Courts generally frown upon arbitrary or overly aggressive timeframes.

3. Prior Breach or Delay:
– The party seeking to make time essential can reinforce their position if there has been a significant delay or breach of contract by the other party. This provides a stronger basis to issue a notice to perform, setting a new deadline.

Legal Implications

If you attempt to make time of the essence unilaterally and the other party fails to meet the new deadline, legal remedies may be available. However, these remedies will depend on whether the notice and the new deadline were reasonable and clear. If a dispute arises, the court will assess several factors:

– Nature of the Contract: The importance of timing to the overall purpose of the contract.
– Notice Adequacy: The clarity and reasonableness of the notice to perform.
– Industry Standards: Common practices and norms within the industry.

Risks and Considerations

Making time of the essence unilaterally carries risks. If the notice is not clear or the deadline unreasonable, it may be deemed invalid, leaving the notifying party without recourse. Moreover, if time is improperly emphasised, it could cause unnecessary strain on business relationships.

Conclusion

While making time of the essence unilaterally is not straightforward, it can be achieved under certain circumstances, chiefly through a well-drafted notice to perform following a delay or breach. It is advisable to consult legal advice before proceeding, ensuring the notice and deadline comply with legal standards and mitigate potential disputes. Understanding these nuances can help uphold your rights in a contract while preserving working relationships wherever possible.

This blog was prepared by Alexander JLO’s senior partner, Peter Johnson on the 15th January 2025 and is correct at the time of publication. With decades of experience in almost all areas of law Peter is happy to assist with any legal issue that you have. He is widely regarded as one of the capital’s leading business lawyers. His profile on the independent Review Solicitor website can be found Here