Time is an essence Part 2 of 3 TPC – Law Q9

Time is an essence - Part 2. When time is not essential. What happen next?

When tenant said I will start renting your place from July, time is a factor to consider in this contract. Time is an essence. BUT, what about situation in which time is not essential?

In all sale & purchase agreements that I have read, time is always an essence - Time wherever mentioned shall be of the essence of the contract. This is to govern the payment of various portions of the purchase price to the Vendor. However, this is a pitfall when all the payments been made, yet the Vendor might face issue with the redemption of the title from Vendor’s financier. This is a case when the purchase price is lower than the bank loan which Vendor has with its bank. In such case, the bank will never release the charge on the property on the Vendor side. Hence, the purchaser cannot obtain the title to be charged to its own bank. The time becomes NOT an essence.

And, where the buyer or seller tries to avoid commitment to the transaction can become the issue of the case. Take for example, Vendor who has changed his mind might avoid meeting the buyer to take the down payments. This can happen in the case during the signing of Sale and Purchase Agreement where a 10% is paid. The Vendor who has changed his mind might avoid meeting the buyer to sign and take the 10%. Insodoing, accuse that time has lapsed! Remember, time is an essence, thus the buyer has not paid the 10% in time. Therefore, the Vendor claims forfeiture of the booking fee.

This becomes equity, and the court will put aside the “Time is an essence” element, and look at the case in equity. Beware however that when time is of the essence, you can’t terminate a contract on the grounds of delay if your own conduct, even if perfectly legitimate, made it impossible or impractical for the other party to meet the deadline.  Unless the contract provides otherwise, in these circumstances the specified deadline would be replaced with a duty to perform within a reasonable time.

https://www.cripps.co.uk/commercial-disputes/time-essence-mean/