In most contracts, a missed deadline is annoying. When a contract says “Time is of the essence,” a missed deadline can be a material breach—killing your deal, your leverage, and sometimes your damages.

What “Time Is of the Essence” Really Means

Those five words elevate dates from guidelines to conditions. If the clause applies to delivery, closing, payments, milestones, or change-order approvals, then lateness can let the other side walk away or demand remedies without proving additional harm.

NY vs. NJ: How Courts Treat It

New York: Courts enforce “time is of the essence” when the contract clearly says it or when a party makes time essential by notice after delays. If time is essential, even modest lateness can be a material breach.

New Jersey: Similar approach, but judges weigh equity. If a party’s conduct caused the delay, or strict enforcement would be unconscionable, courts sometimes temper the outcome—especially where substantial performance exists.

Where Businesses Get Burned

• Buried scope: The clause sits in boilerplate but applies to every deliverable.
• No float: Dependencies (permits, client inputs) make the date unrealistic.
• Silence after slippage: Parties act like time isn’t essential—until a fight breaks out.
• Payment timing traps: Late progress payments trigger default cascades.

How to Draft It (Without Setting a Trap)

• Be specific: Make time essential only for identified items (e.g., final delivery, closing date).
• Add cushions: Build in notice-and-cure periods or short extensions for force majeure and third-party delays.
• Tie to readiness: Condition deadlines on timely approvals, access, and information from the other side.
• Escalate remedies: Use staged consequences (credits/liquidated damages) before termination.

If You’re Late (But Want to Save the Deal)

1. Send a prompt notice explaining the reason, the cure plan, and a short firm date.
2. Offer consideration (e.g., fee reduction or added warranty) to keep the deal alive.
3. Request waiver or modification in writing; confirm that continued performance won’t be treated as default.
4. Document prevention if the other side caused delay (late approvals, site access, payment holdups).

If the Other Side Is Late (And Time Is Essential)

1. Serve a “time is of the essence” notice (if not already explicit) with a reasonable drop-dead date.
2. Preserve remedies: state that failure by that date is a material breach and may terminate the agreement.
3. Avoid waiver: Don’t accept late performance without a written reservation of rights.
4. Limit damages risk: Keep records showing why timing mattered (seasonality, coordination costs, lost slots).

Construction & Real Estate: Special Risks

• Milestones + pay apps: Missing a date can suspend payments and lien rights.
• Closings: In real estate, a TIOE closing date can end the deal unless both sides are ready, willing, and able.
• Change orders: If approvals are time-essential, work performed without timely signoff may be unrecoverable.

This article provides general information for NY/NJ business owners and is not legal advice. Contract outcomes depend on language, notices, and facts.