{"id":223367,"date":"2023-05-23T16:53:50","date_gmt":"2023-05-23T03:53:50","guid":{"rendered":"https:\/\/legalvision.co.nz\/?p=223367"},"modified":"2023-05-23T16:53:52","modified_gmt":"2023-05-23T03:53:52","slug":"time-is-of-the-essence","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/commercial-contracts\/time-is-of-the-essence\/","title":{"rendered":"Importance of the Phrase \u2018Time is of the Essence\u2019 in NZ Commercial Contracts"},"content":{"rendered":"\n<p>Running a business in New Zealand will involve negotiating, drafting and entering various commercial contracts. Contracts are legally enforceable, so both parties must abide by its terms. Notably, a contract is only as strong as the terms it contains. An important term you should include in your commercial contracts is \u2018time is of the essence\u2019. This article will explain why you should incorporate the phrase \u2018time is of the essence\u2019 and what it means.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">When is a Commercial Contract Enforceable?<\/h2>\n\n\n\n<p>A commercial contract is enforceable when it meets all the <a href=\"https:\/\/legalvision.co.nz\/commercial-contracts\/legally-binding-agreement-new-zealand\/\">elements of a binding contract<\/a>. The elements of a binding contract are as follows:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>clear offer;<\/li>\n\n\n\n<li>unequivocal acceptance;<\/li>\n\n\n\n<li>sufficient consideration;<\/li>\n\n\n\n<li>certainty in terms; and<\/li>\n\n\n\n<li>intention to be binding.<\/li>\n<\/ul>\n\n\n\n<p>Let us explore each element.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Clear Offer<\/h3>\n\n\n\n<p>For a contract to be binding, one party must send the other a clear offer that details the terms of the agreement.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Unequivocal Acceptance<\/h3>\n\n\n\n<p>The party receiving the offer must then accept without any conditions. If the party receiving the offer changes the terms, this is called a counter-offer. Likewise, the original party must then accept the offer.&nbsp;<\/p>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>Importantly, you must conduct your acceptance in the way that the offer prescribes. For example, if an offer states that signing a contract will amount to unequivocal acceptance, you cannot send a text message to the offering party. Otherwise, you risk creating confusion as to whether you accepted the offer and whether a legally binding agreement stands.<\/p>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Sufficient Consideration<\/h3>\n\n\n\n<p>An important element of a binding contract is consideration. This means that each party must receive a benefit or detriment for the contract to be binding. For example, in exchange for an IT consulting service, your business pays a fee.&nbsp;<\/p>\n\n\n\n<p>However, consideration does not have to be equal between the parties and can be nominal. The only requirement is that something is given in exchange for the other.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Certainty in Terms<\/h3>\n\n\n\n<p>The terms of a contract must also be certain for a contract to be binding. Certain terms mean that they are not ambiguous or have two meanings. If a term is ambiguous, a court may not enforce that term. If the term is essential to the meaning of the contract, a court may make the whole contract unenforceable.&nbsp;<\/p>\n\n\n\n<div  class=\"box box--icon box--star\">\n    <p>To avoid a court finding your whole contract unenforceable over one ambiguous term, it may be beneficial to include a <a href=\"https:\/\/legalvision.co.nz\/commercial-contracts\/clauses-client-agreement\/\">severability clause<\/a>.<\/p>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Intention to be Binding<\/h3>\n\n\n\n<p>Both parties must also intend for the contract to be binding for it to be enforceable. For example, if one party does not believe the contract is binding, the other party cannot enforce the contract. This situation can arise when one party believes the parties are still negotiating the final contract and has no intention of being bound at that moment.&nbsp;<\/p>\n\n\n\n<p>A contract also cannot be enforced if it was entered into by minors or someone who lacks proper mental capacity.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">\u2018Time is of the Essence\u2019 Clause<\/h2>\n\n\n\n<p>Including the phrase time is of the essence in your contract means that the contract becomes time-sensitive. As such, your contracting partner cannot incur unnecessary delays when accepting the contract terms.<\/p>\n\n\n\n<p>A time is of the essence clause will mean that your contracting partner must perform the services specified in the contract in a suitable time frame. Otherwise, your business has a legal right to terminate the contract. However, this will not be the case in all circumstances. For example, if a business pays the supplier one day late, it is unlikely that the contract will be terminated. Continuing business operations makes more commercial sense, though the late party may receive a penalty if the contract allows this.&nbsp;<\/p>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>If a breach of a time is of the essence clause occurs, you should consider whether that breach was material to the functioning of the contract before terminating the contract. This means that the breach is ultimately the reason why the contract cannot be performed.<\/p>\n<\/div>\n\n\n\n<p>If your contract depends on your contracting partner getting something done in a certain amount of time, consider including a time is of the essence clause. This ensures that if they deviate from this timing, you have a legal avenue to seek compensation for their contractual breach.<\/p>\n\n\n    <div class=\"my-7 lg:my-10 border-y-2 border-gray-100 py-7 lg:py-10 flex flex-col sm:flex-row items-start gap-10\">\n                    <img decoding=\"async\" class=\"w-52 mx-auto my-0! rounded\" src=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/2\/2021\/12\/22115855\/cytonn-photography-GJao3ZTX9gU-unsplash-e1640129621597.jpg\" alt=\"Front page of publication\"\n                 loading=\"lazy\" width=\"208\" height=\"298\">\n                <section>\n            <div class=\"text-2xl font-bold\">Commercial Contracts Checklist<\/div>\n            <div class=\"body-text\">\n                <p>To protect your business, ensure supplier contracts meet your business\u2019 needs. Our free Commercial Contracts Checklist will help.<\/p>\n            <\/div>\n            \n\n<a href=\"https:\/\/go.legalvision.co.nz\/Commercial_Contracts_Guide_NZ.html\" class=\" block px-5 py-3.5 max-w-fit bg-orange button__hover transition rounded text-white font-bold text-lg no-underline uppercase leading-tight text-center\" target=\"\" rel=\"\">Download Now<\/a>        <\/section>\n    <\/div>\n\n\n\n\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span class=\"text-lg not-prose\">\n                            Call <a href=\"tel:+64800005570\" class=\"not-prose\">0800 005 570<\/a> 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They are legally binding documents as long as they meet all the elements of an enforceable contract. If your business has dealings with third parties that are time-sensitive, you might consider drafting a \u2018time is of the essence\u2019 clause. This clause mandates that the particular service in a contract must be completed within a specific timeframe. Any deviation from this could result in a breach of contract, leading to compensation for loss or a right to terminate the contract for breach.&nbsp;<\/p>\n\n\n\n<p>For legal assistance in drafting or reviewing your commercial contracts, our experienced <a href=\"https:\/\/legalvision.co.nz\/contract-lawyers-lp\">contract lawyers<\/a> can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on <a href=\"tel:+64800005570\" class=\"AVANSERnumber dynamic-number\">0800 005 570<\/a> or visit our <a href=\"https:\/\/legalvision.co.nz\/membership\/\">membership page<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Frequently Asked Questions<\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1684813567241\"><strong class=\"schema-faq-question\"><strong>Do I have to include a time is of the essence clause?<\/strong><\/strong> <p class=\"schema-faq-answer\">There is no legal requirement to include a \u2018time is of the essence\u2019 clause in your commercial agreement. However, such a clause might be beneficial when engaging with certain suppliers or other third parties. For example, suppose you are an event planning business contracting with a flower delivery business. Including a \u2018time is of the essence\u2019 clause may be critical, given a late delivery after an event takes place is of no use to your business.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1684813581152\"><strong class=\"schema-faq-question\"><strong>Will all time is of the essence clauses be enforceable?<\/strong><\/strong> <p class=\"schema-faq-answer\">A court will only enforce a \u2018time is of the essence\u2019 clause if it is reasonable.\u00a0<\/p> <\/div> <\/div>\n<div class=\"not-prose m-feedback-prompt\">\n    <!-- Thumbs up\/down bar -->\n    <div class=\"m-feedback-prompt__main\">\n        <div class=\"m-feedback-prompt__title\">Was this article helpful?<\/div>\n        <div>\n            <!--span class=\"m-feedback-prompt__button--text\">Thanks!<\/span-->\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--yes\"\n                    data-analytics-link=\"feedback-prompt:yes\" aria-label=\"Agree\">\n                <i class=\"fa-regular fa-thumbs-up fa-3x\"><\/i>\n            <\/button>\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--no\"\n                    data-analytics-link=\"feedback-prompt:no\" aria-label=\"Disagree\">\n                <i class=\"fa-regular fa-thumbs-down fa-3x\"><\/i>\n            <\/button>\n        <\/div>\n    <\/div>\n\n    <!-- Feedback form -->\n    <div class=\"m-feedback-prompt__form\">\n        <div class=\"m-feedback-prompt__form--thanks \">\n            <div>Thanks!<\/div>\n            <p>\n                We appreciate your feedback \u2013 your submission has been successfully received.            <\/p>\n        <\/div>\n        <form id=\"contact-form\" class=\"m-feedback-prompt__form--form\" action=\"\" method=\"post\">\n            <input type=\"hidden\" id=\"authenticity_token\" name=\"authenticity_token\" value=\"3bc3beddae\" \/><input type=\"hidden\" name=\"_wp_http_referer\" value=\"\/api\/wp\/v2\/posts\/223367\" \/>            <input value=\"https:\/\/legalvision.co.nz\/commercial-contracts\/time-is-of-the-essence\/\" type=\"hidden\" name=\"currenturl\"\n                   id=\"currenturl\">\n            <input value=\"Importance of the Phrase \u2018Time is of the Essence\u2019 in NZ Commercial Contracts\" type=\"hidden\" name=\"currenttitle\"\n                   id=\"currenttitle\">\n            <label>\n                <!-- display on thumbs-up -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--yes\">\n                    Can you tell us <span class=\"font-semibold\">why<\/span> you found it helpful?\n                <\/span>\n\n                <!-- display on thumbs-down -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--no text-lg\">\n                    How can we better improve this article?\n                <\/span>\n                <textarea name=\"feedbackmessage\" id=\"feedbackmessage\" required><\/textarea>\n            <\/label>\n\n            <div class=\"m-feedback-prompt__form--error\" id=\"form-submit-error\"><\/div>\n            <button id=\"submit-contact-form-button\" type=\"submit\" name=\"commit\" class=\"m-feedback-prompt__form--submit\"\n                    data-analytics-link=\"feedback-prompt:submit\">\n                Submit            <\/button>\n        <\/form>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Running a business in New Zealand will involve negotiating, drafting and entering various commercial contracts. Contracts are legally enforceable, so both parties must abide by its terms. Notably, a contract is only as strong as the terms it contains. An important term you should include in your commercial contracts is \u2018time is of the essence\u2019.<a href=\"https:\/\/legalvision.co.nz\/commercial-contracts\/time-is-of-the-essence\/\">Continue reading <span class=\"sr-only\">&#8220;Importance of the Phrase \u2018Time is of the Essence\u2019 in NZ Commercial Contracts&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13248,"featured_media":215621,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"211951,208350,203497,203301,219529,217089","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[3],"tags":[25,220,242,983,1143,1905],"class_list":["post-223367","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commercial-contracts","tag-small-business","tag-terminate-for-breach","tag-breach-of-contract","tag-contract-breach","tag-commercial-contract","tag-time-is-of-the-essence"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>\u2018Time is of the Essence\u2019 in Commercial Contracts | LegalVision NZ<\/title>\n<meta name=\"description\" content=\"A &#039;time is of the essence\u2019 clause mandates that a particular service in a contract must be completed by a certain timeframe. Find out more.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/legalvision.co.nz\/commercial-contracts\/time-is-of-the-essence\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"\u2018Time is of the Essence\u2019 in Commercial Contracts | LegalVision NZ\" \/>\n<meta property=\"og:description\" content=\"A &#039;time is of the essence\u2019 clause mandates that a particular service in a contract must be completed by a certain timeframe. 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Dillon is currently studying a Bachelor of Laws and Bachelor of Commerce majoring in Finance at Victoria University of Wellington. In his spare time, Dillon enjoys watching sports and keeping up with geo-politics.","sameAs":["laini.bennett@legalvision.com.au"],"url":"https:\/\/legalvision.co.nz\/author\/dillonbalasingham\/"},{"@type":"Question","@id":"https:\/\/legalvision.co.nz\/commercial-contracts\/time-is-of-the-essence\/#faq-question-1684813567241","name":"Do I have to include a time is of the essence clause?","acceptedAnswer":{"@type":"Answer","text":"There is no legal requirement to include a \u2018time is of the essence\u2019 clause in your commercial agreement. However, such a clause might be beneficial when engaging with certain suppliers or other third parties. For example, suppose you are an event planning business contracting with a flower delivery business. Including a \u2018time is of the essence\u2019 clause may be critical, given a late delivery after an event takes place is of no use to your business.","inLanguage":"en-NZ"},"inLanguage":"en-NZ"},{"@type":"Question","@id":"https:\/\/legalvision.co.nz\/commercial-contracts\/time-is-of-the-essence\/#faq-question-1684813581152","name":"Will all time is of the essence clauses be enforceable?","acceptedAnswer":{"@type":"Answer","text":"A court will only enforce a \u2018time is of the essence\u2019 clause if it is reasonable.\u00a0","inLanguage":"en-NZ"},"inLanguage":"en-NZ"}]}},"_links":{"self":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts\/223367","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/users\/13248"}],"replies":[{"embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/comments?post=223367"}],"version-history":[{"count":2,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts\/223367\/revisions"}],"predecessor-version":[{"id":223369,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts\/223367\/revisions\/223369"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/media\/215621"}],"wp:attachment":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/media?parent=223367"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/categories?post=223367"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/tags?post=223367"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}