The defendant entered into a hire-purchase contract for a computer, time being stipulated to be ‘of the essence’ in relation to the payment obligations. He defendant defaulted, and the plaintiff took possession of the goods, and and sought payment of the balance due.
Held: Time is of the essence where the parties have expressly stipulated in their contract that time is to be of the essence. The same result will follow if the contract contains a clause to the effect that any breach of such a clause will entitle the innocent party to terminate (or cancel) the agreement. The injured party is relieved of any obligation that remains unperformed on his part. In addition the injured party may claim for damages on the basis that upon termination of the contract the obligations of both parties remaining unperformed are brought to an end.
Mustill LJ said: ‘A stipulation that time is of the essence in relation to a particular contractual term, denotes that timely performance is a condition of the contract. The consequence is that delay in performance is treated as going to the root of the contract, without regard to the magnitude of the breach. It follows that where a promisor fails to give timely performance of an obligation in respect of which time is expressly stated to be of the essence, the injured party may elect to terminate and recover damages in respect of the promisor’s outstanding obligations, without regard to the magnitude of the breach.’
Judges:
Lawton, Mustill, Nicholls LJJ
Citations:
[1986] EWCA Civ 5, [1987] QB 527, [1987] 1 All ER 267, [1987] 2 WLR 7
Links:
Jurisdiction:
England and Wales
Citing:
Cited – Bettini v Gye QBD 1876
Mr Bettini agreed to sing for Mr Gye in concerts and operas in London between March and July 1875. The contract said he was to be in London ‘without fall’ at least six days before the 30th March for rehearsals. Because of illness, he did not arrive . .
Cited – Hong Kong Fir Shipping Co v Kawasaki Kisen Kaisha Ltd CA 20-Dec-1961
The plaintiffs had recently acquired the ship the ‘Hong Kong Fir’ and contracted to charter it to the defendants, but being late in delivering it, the defendants cancelled the charterparty contract. The plaintiffs said the repudiation was wrongful, . .
Cited – Photo Production Ltd v Securicor Transport Ltd HL 14-Feb-1980
Interpretation of Exclusion Clauses
The plaintiffs had contracted with the defendants for the provision of a night patrol service for their factory. The perils the parties had in mind were fire and theft. A patrol man deliberately lit a fire which burned down the factory. It was an . .
Cited – Bunge Corporation (New York) v Tradax Export Sa (Panama) HL 25-Feb-1981
The FOB contract for the sale of goods required the buyers to give notice of the probable readiness of the ships on which the goods were to be carried. The notice was given four days too late. The sellers declared the buyers in default and claimed . .
Cited – Campbell Discount Company Ltd v Bridge HL 1962
The parties disputed the validity of a clause in a car hire contract relating to the consequences of a breach.
Held: (Majority) The agreement had been terminated by breach rather than by the exercise of an option, so that the stipulated . .
Distinguished – Financings Ltd v Baldock CA 1963
The hirer took delivery of a vehicle under an HP contract. he plaintiff exercised a contractual right to terminate the hiring and take possession of the vehicle when the defendant failed to pay the first two monthly instalments.
Held: Where an . .
Cited – Bunge Corporation (New York) v Tradax Export Sa (Panama) HL 25-Feb-1981
The FOB contract for the sale of goods required the buyers to give notice of the probable readiness of the ships on which the goods were to be carried. The notice was given four days too late. The sellers declared the buyers in default and claimed . .
Cited by:
Cited – Phones 4U Ltd v EE Ltd ComC 16-Jan-2018
The parties contracted for the marketing of contracts for the marketing of the defendant’s mobile phone contracts. On the claimant entering administration, the defendant exercised a clause in their contract to terminate the contract. The claimant . .
Lists of cited by and citing cases may be incomplete.
Financial Services, Contract
Updated: 12 July 2022; Ref: scu.262652