The typical Time of the Essence clause in an agreement for sale of property may state as follows:-

“Time shall be of the essence of this Agreement as it relates to payment of the purchase price…or other sums payable by the Purchaser … on the failure of the Purchaser on the due date to pay any sum … payable hereunder … the Vendor reserves the right to cancel this Agreement … and … forfeit the deposit without further notice…”

This clause purports to highlight that the timelines in an agreement must be followed and adhered to, by having the parties agree, upfront, the potential consequences if the timelines are dishonoured. These clauses are common in sale of property transactions, as well as in commercial transactions. 

It should be noted that even where an agreement does not contain a Time of the Essence clause, a notice, making time of the essence, can be served on a party to a transaction where that party has missed a deadline, or is delaying the completion of the transaction. When time is made of the essence, then one can rescind the contract for failure to meet any timelines stipulated in the said contract.

It is important to note that, Time of the Essence clauses, or notices making time of the essence, must be express, clear, and leave no room for ambiguity. Legislation has recognised this, and that the clause or notice must represent the parties’ intention to make time of the essence of the agreement. Where time is not made of the essence, the failure to complete within a specific period cannot automatically lead to the cancelling of a contract or agreement. 

What if the timeline is waived?

A typical Time of the Essence clause may provide that the Vendor in a sale of property has the right to waive his/her rights under the clause, and grant an extension of time. A consequence of this waiver may be that time is no longer of the essence, unless it is expressly made so again. Depending on the wording of an extension, the parties may be unable to insist that time is of the essence, and if the extension gives no fixed date for completion, then time may be “at large”. This point is why it is common to see a further clause in agreements to the effect that no delay, or waiver, will operate to cancel a party’s right to rescind the agreement for any breaches of the pre-set timeframes for completion of certain matters under the agreement.

Better safe than sorry

Even where an agreement contains a Time of the Essence clause, it is customary and advisable for a notice making time of the essence to still be sent at the requisite time, so as to avoid any doubt and ensure that time is made clearly and irrefutably of the essence.  
Time of the Essence clauses must be clearly expressed and explicit in their wording, and should be bolstered by the commensurate behavior of the parties to the agreement, otherwise time may not be of the essence, and the question will arise “is it really?”, which can lead to uncomfortable situations for all involved.