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Extension of time – “Time of the Essence” & “Time at Large”

“Time of the Essence” & “Time at Large”

These two expressions are familiar to many. But in a contractual sense what do they mean and are they truly the opposites that they first appear to be?

Time of the Essence – To understand the importance of this term we first must remind ourselves that English law groups breaches of contract under two headings1, namely those where the term breached is said to go to the ‘root’ of the contract – that is its breach deprives the innocent party substantially of the whole benefit of the contract (sometimes termed conditions) and the remainder (sometimes termed warranties). Breach of the former allows the wronged party to elect to terminate the contract and claim damages, breach of the latter to claim damages only. If time is of the essence in the contract then that time requirement is a condition and a failure to deliver/complete will allow the innocent party to treat the contract as terminated.

Where a written contract states that time is of the essence then that is clearly so. Time can still be of the essence where those clear words are not used but can be implied from other words used or sometimes from the nature of the contract (for example the supply of perishable goods). The fixing of a delivery or completion date is not of itself sufficient to make time of the essence.

A quick note concerning something dear to us all – payment. Stipulations as to time of payment, unless a different intention appears from the terms of the contract, are not of the essence of the contract2. Failure to make payment on time does not therefore allow, without more substance, the contract to be treated as terminated.

But what if time is not of the essence. If a delivery / completion date is specified then damages will still be recoverable by the innocent party in the event of a failure to deliver / complete, in other words although time is not of the essence it is not immaterial.

If there is no specified or agreed date then the law implies a reasonable time3.

But the law does allow a party to a contract, where time is not of the essence, to make time of the essence in certain circumstances. This is an unusual departure from the general rule that a contract can only be varied by agreement of all parties. Where one party has been guilty of undue delay, the innocent party can give the guilty party notice requiring performance within a certain period and thus making time of the essence. However this process may not be straightforward and should only be undertaken with proper advice. In particular the person giving notice must be without culpability themselves and be acting reasonably.

Time at Large – Whilst ‘time of the essence’ is a term of the contract, ‘time at large’ is usually used to explain a situation where the terms of the contract as to time become invalid. That is to say, the supplier or contractor is no longer bound by the contract provision that he has to deliver or complete the Works by a certain date or extended date.
The most common situation where this is alleged to occur is when the one party obstructs the other in performance of their time performance obligation4. It is to avoid that occurring that the standard forms of contract include provision for extensions of time for completion. Alternatively, time can become ‘at large’ where there is adequate provision for extensions of time to be given but the machinery fails due to the employer or his administrator’s default so that its purpose is not achieved and is either no longer capable of being achieved or is not likely to be achieved5.

Where time becomes ‘at large’, in common with time not being of the essence, there is still an obligation to complete within a reasonable time6. And what is a reasonable time? That very much depends on the circumstances and is a subject in its own right.

So to avoid time becoming ‘at large’ contracts incorporate provisions to adjust the completion date upon the happening of certain events. That tends to be termed the giving of an extension of time, which has its own rules and problems and is the focus of a separate article.

1 This neat arrangement was changed by the 1962 Court of Appeal Judgment in Hong Kong Fir Shipping v. Kawasaki Kisen Kaisha so that a term can also be either, depending upon their actual effect. These are called innominate or intermediate terms. However the principal of the different effect of a breach of a condition and a warranty is still correct.

2 s. 10 of the Sale of Goods Act 1979.

3 s. 14 of the Supply of Goods and Services Act 1982 and s. 29 of the Sale of Goods Act 1979 as applicable.

4 “It is well settled that in building contracts – and in other contracts too – when there is a stipulation for work to be done in a limited time, if one party by his conduct – it may be quite legitimate conduct, such as ordering extra work – renders it impossible or impracticable for the other party to do his work within the stipulated time, then the one whose conduct caused the trouble can no longer insist upon strict adherence to the time stated. He cannot claim any penalties or liquidated damages for non-completion in that time.” Lord Denning MR in Trollope & Colls Ltd v North West Metropolitan Regional Hospital Board [1973].

5 Bernhard’s Rugby Landscapes Ltd v Stockley Park Consortium (No 2) [1998]

6 “In the field of construction law, one consequence of the prevention principle is that the employer cannot hold the contractor to a specified completion date, if the employer has by act or omission prevented the contractor from completing by that date. Instead, time becomes at large and the obligation to complete by the specified date is replaced by an implied obligation to complete within a reasonable time.” Multiplex Constructions (UK) Ltd v Honeywell Control Systems Ltd (No 2) [2007] EWHC 447 (TCC)

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