Time is the essence of contract

TIME IS NOT THE ESSENCE OF THE CONTRACT UNLESS SPECIFIED.   

Time is noted as the essence of the contract when the parties fulfill their duties within the specified time otherwise the agreement lapses or by virtue of its terms gets terminated which results in filing of suits.  Many civil cases have usually this aspect (time is or not the essence of the contract) as one of the primary issue between the parties litigating. Usually agreements are entered into between persons on certain conditions to be fulfilled by one party to the other within the specified time limit.  For example in an agreement to sell a property the clause relating to time may be as under:-

Model Clause No.1: “The buyer undertakes to pay to the seller the remaining consideration within 6 months period”.

Can we call the above clause as specifying time to be the essence of the contract?  NO.

Though the clause is clear that the buyer has to make payment within 6 months period, still the same cannot be called time is the essence of the contract.  Hence the buyer can make late payment also to the seller even after the period of 6 months and still file a case to claim the property.   

Reason:  To make time the essence of the contract a clear stipulation as to what would be the consequence if the money is not paid should be stated in the clause.  For example:

Model Clause No.2: “The buyer undertakes to pay to the seller the remaining consideration within 6 months failing which the contract shall stand terminated”.

Here the phrase “failing which the contract shall stand terminated” clearly implies the consequence of failure to make payment.  In this case the time is essence of the contract.

Hence it is important for the legal draftsman to be careful while drafting contracts as time assumes vital significance.