Time Is of the Essence Provision in Construction Contracts

Most people involved in a construction project expect work to be completed within a specific time frame. When that doesn’t happen, people tend to look to the terms of the contract for recourse. If they find specific language making it clear that time does indeed matter—that “time is of the essence”—then delayed performance of the particular or general contract terms will likely constitute a material breach of the contract. This essentially allows the non-breaching party to terminate the contract.

This is also true of subcontracts, in which the general contractor will often specify not only a completion date but will also include the “time is of the essence” provision. If the subcontractor does not complete its work on or before the completion date, the general contractor may choose to terminate the subcontract, hire another subcontractor to complete the job, and sue the original subcontractor for breach of contract.

Interestingly, if a contract does not include a “time is of the essence” provision, a delay will not be considered a material breach so long as performance is effectuated within a reasonable time. A “time is of the essence” provision can also be waived, but only if the parties continue their dealings regardless of late performance. In that case, courts will tend to not enforce termination of a contract.

But be aware that the simple granting of time extensions will not necessarily constitute a waiver. To extend a completion deadline but also preserve your “time is of the essence” provision, grant extensions in writing expressly noting that the defaulting party is still in breach of the contract. In that way, when you’ve had enough of the delays, you can still choose to terminate the contract.

THIS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT LEGAL ADVICE. CONSULT WITH YOUR OWN LAWYER ABOUT YOUR SPECIFIC SITUATION.