Related topics

Obligations under the Contract, Primary

Obligations under the Contract, Secondary

Time is made of the essence of the contract by notice

Time is made of the Essence of the Contract
Last updated: 06-Jul-2015

Per Lord Cranworth, V.C. in Parkin v Thorold [1851] EngR 542; (1851) 2 Sim NS 1 at p.8:

… though the contract, according to its terms, is that the purchase shall be completed on a given day, and is so framed that if not completed on that day the purchaser is at law entitled to recover back his deposit; yet if the parties deal together on the footing of having disregarded the appointed day; as having, according to the ordinary language used, agreed to treat time as not being of the essence of the contract, then this Court will give relief, although the day for completion may have passed.

In Mersey Steel and Iron Co v Naylor Benzon & Co (1884) 9 App Cas 434 Lord Selborne at 438-439, stated that one must examine conduct of defaulting party to see whether it amounts to a renunciation. Lord Blackburn was more specific on the subject of delayed payment and stated at p.444 that:

I quite agree that when there were a certain number of tons of the article delivered, it was a material part of the contract that the man was to pay, but it was not a part of the contract that went to the root of the consideration in the matter. There was a delay in fulfilling the obligation to pay the money, it may have been with or without good reason (if that would have made any difference), but it did not go to the root or essence of the contract, nor do I think that there is any sound principle upon which it could do so. I repeatedly asked Mr. Cohen whether or not he could find any authority which justified him in saying that every breach of a contract, or even a breach which involved in it the non-payment of money which there was an obligation to pay, must be considered to go to the root of the contract, and he produced no such authority. There are many cases in which the breach may do so; it depends upon the construction of the contract.

In Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana (The Scaptrade)[1983] 2 All ER 763 per Lord Diplock at p.768:

Prima facie parties to a commercial contract bargaining on equal terms can make &time to be of the essence" of the performance of any primary obligation under the contract that they please, whether the obligation be to pay a sum of money or to do something else. When time is made of the essence of a primary obligation, failure to perform it punctually is a breach of a condition of the contract which entitles the party not in breach to elect to treat the breach as putting an end to all primary obligations under the contract that have not already been performed.

Per Mustill LJ in Lombard North Central v Butterworth [1987] QB 527:

2. A stipulation that time is of the essence, in relation to a particular contractual term, denotes that timely performance is a condition of the contract. The consequence is that delay in performance is treated as going to the root of the contract, without regard to the magnitude of the breach.

3. It follows that where a promisor fails to give timely performance of an obligation in respect of which time is expressly stated to be of the essence, the injured party may elect to terminate and recover damages in respect of the promisor’s outstanding obligations, without regard to the magnitude of the breach.

Leave your comments

Form by