Time is of the Esssense
The term “time is of the essence” is familiar to most people but not necessarily understood and is bandied around on a daily basis by solicitors and paralegals during the conveyance process.
It is a phrase often used in contracts which, in effect says: the specified time and dates in this Contract are vital and thus, mandatory, and “we mean it”. Therefore any delay, reasonable or not, slight or not, will be grounds for cancelling the Contract.
The most common residential contracts used in Queensland are the REIQ Contract for Houses and Residential Land eighth edition, and ADL Forms Contract for Sale of House and Land version 8.4. In both of these contracts “time of the essence” is expressly stipulated.
We were asked by one of our clients to explain what time is of the essence actually means.
The term is described eloquently by Lord Parker in the 1915 English case Stickney v Kibble
‘At law, time was always of the essence of the contract so that if a time were fixed for completion of the contract , the stipulation had to be rigidly adhered to or the party aggrieved would have either an action for damages for breach or, if the stipulation went to the root of the contract, an immediate right to terminate.’
The fact that most Queensland real estate contracts have time of the essence means that the conveyance process is the quickest in Australia. Other states do not have the provision and the sale process commonly takes twice as long.
The “essence” of the contract is that there are specific dates set for activity, such as the Settlement Date which gives a completion date. This is the essence – that the Contract will be completed on the Settlement Date and any activity leading up to that date must bear this in mind, and if the buyer does not settle on the due date, the Contract may be at an end there and then.
The above is general information only and it is important that parties to a contract obtain legal advice specific to their situation