Time Is of the Essence Clause

time is of the essence

Time Is of the Essence Clause

A Time Is of the Essence Clause (TOE) is language contained in a contract that specifies that a certain time or date is important. In effect, a time is of the essence clause is saying, “the times and dates specified in this agreement are vital and mandatory to the contract”. As a result, any delay might be grounds for canceling the contract.

Therefore, a TOE clause serves to define the period of time wherein the parties must perform their duties, such as delivering goods or paying for services. TOE clauses that are included in a valid contract are enforceable under state contract laws.


David Ericksen of Severson & Werson notes the following:

The objective of a “time is of the essence” clause is to transform what might be flexible schedule dates and milestones into material contract obligations with ramifications. Absent such a clause, the Uniform Commercial Code and many applicable state codes would make deadlines effectively flexible by providing that a missed deadline may be overcome by the payment of corresponding damages or other compensation.

Please see the rest of Dave’s article HERE

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