Deadlines are sometimes all that separates a successful business from one that shutters its doors for good. If your company can’t fulfill orders on time, consumers will go elsewhere and that leads to diminishing sales and revenues. Before you know it, there’s no way to stop the financial bleeding. Including “time is of the essence” provisions in your business contracts with vendors and other suppliers can help your company meets its own deadlines by setting clear boundaries for those you do business with and ultimately depend on for support.
Small Delays in Deliverables can lead to Material Breach
When it comes to delivery dates, some parties to contracts think of the calendar as a ballpark figure for satisfying their end of the agreement. Failing to meet those dates can set off a disastrous domino effect for your company amounting to a material breach of the contract on the part of those other parties. A material breach leaves the contract irrevocably broken, and can allow you to pursue damages in civil court. The court considers timing an essential component when determining if a breach exists.
Late Payments are an Exception
Missing payments in contracts does not always constitute a material breach, because it’s too easy to remedy the agreement outside of court. For one, the debtor to the contract could always pay off the debt. Alternatively, the creditor can charge interest on the amount owed up to the limits of state law until the debtor pays the amount off in full. A judge doesn’t usually need to step in and find a remedy or cure for the agreement unless the debtor willfully refuses to make payment.
Enforcing Time is of the Essence Provisions
Outside of a material breach and an award for damages, the court may consider other options in ruling on failures to meet delivery times and dates. A judge might give the breaching party more time to satisfy the terms of the agreement, including an extension on delivery dates. In some instances, a judge could throw out the clause entirely because it places an unfair burden on the breaching party to meet. For example, setting a delivery date for the completion of a project that’s far shorter than the industry standard essentially sets the other side up to fail or default. The court won’t look kindly on such a clause, and will likely rule against your business.
Regardless of the details, you should always make dates and times vital to the success of the contract clear and in writing. Do not use vague language: give the month, day, and year you expect completion. It also does not hurt to state the importance of meeting those benchmarks and what could happen to your company’s ability to live up to the arrangement should they not be met.
Having business contract difficulties? Contact our commercial litigation attorneys in Pennsylvania today for a consultation to discuss how we can turn a grim situation around for the better. Your business is your life. Do everything in your power to protect it.