Legal Question in Business Law in California

Re: time is of the essence

A "time is of the essence" clause is quite important to the carrying out of the obligations under any contract. Either or both parties may be required to do something under the contract. This clause basically says do not procrastinate. But it is more than just procrastination, it is a legal requirement that you act as quickly and reasonably as possible to carry out the requirements that you are required to carry out under any contractual obligation. If you fail to act promptly, timely and it can be shown by the other party or parties to the contract that you then you can be responsible for damages because of your failure to comply with this clause. This is very subjective of course and does not have specific boundaries because it depends on the facts of anyone given case. The clause is not just fluff and is not necessarily put in every contract. But when it is placed into contract is therefore the purpose of making sure everyone knows that it is important that the obligations are carried out promptly. I hope that helps you better understand the nature of the clause and the effect and meaning.

Re: time is of the essence

"Time is of the essence" does not really mean "act quickly." It means that the times or time intervals set forth in the contract are to be taken literally. A party to the contract may be given sixty days to do something he could easily do in ten, but if he waits until the 61st day to perform, then he has breached the contract if it contains a "time is of the essence" provision. Without such a provision, a court might overlook or forgive the slight tardiness as insufficient to constitute a material breach. A material breach is often a ground to terminate a contract; a minor breach would at most be a ground for a price adjustment or similar minor damages.