Time is of the Essence in Contracts

Time Is Of The Essence In Contracts In Texas

Time is a fundamental element of contract law. Parties often specify deadlines or specific times for performance to ensure that each party receives the expected benefits of the contract. The phrase "time is of the essence" is often used in contracts to emphasize the importance of timely performance. This phrase means that the performance of a contract term within the prescribed time is essential and vital to the agreement.

If a provision in a contract fixes a specific time of performance, that provision is considered a vital term of the contract. Williams v. Shamrock Oil & Gas Co., 95 S.W.2d 1292, 1295 (Tex. Com. App. 1936); Richards v. Combest, 208 S.W.2d 392, 407-08 (Tex. Civ. App.—Beaumont 1948, writ ref’d n.r.e.).  If a party fails to perform within the specified time, the other party may treat this failure as a breach of contract, justifying cancellation. Id. To be entitled to any relief, the non-breaching party must perform in strict compliance within the time prescribed when time is of the essence of a contract. Neco Engineering Co. of Texas, Inc. v. Lee, 487 S.W.2d 185, 187 (Tex. Civ. App.—Waco 1972, no writ).

Whether time is of the essence of a contract is usually a question of fact for the jury unless the contract expressly makes time of the essence, or the subject matter of the contract is such that the court may take judicial knowledge of the fact that the parties obviously intended for time to be of the essence. Siderius, Inc. v. Wallace Co., 583 S.W.2d 852, 864 (Tex. Civ. App.—Tyler 1979, no pet). When the intention of the parties is not made clear by the language of the contract itself, the surrounding circumstances may be taken into consideration in determining intent.

Acceptance of late performance may indicate that it was not the intention of the parties that time be of the essence of the contract. Even when time is of the essence in a sales contract, the stipulated time limit may be extended by agreement or waiver. Waiver of a time is of the essence provision in a real estate contract can be shown by a course of dealings between the parties of the contract.

In conclusion, the phrase "time is of the essence" emphasizes the importance of timely performance in contracts. The parties must clearly express their intention for time to be of the essence of the contract, or there must be something in the nature of the subject matter, or connected with the purpose of the contract and the circumstances surrounding it, that makes it apparent that the parties intended for the contract to be performed at or within the time specified. If time is of the essence, strict compliance with the time prescribed is necessary to avoid a breach of contract.

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