25.01  Contractual timetables are a significant source of disputes.¹ First, questions may arise as to the order of performance of the two parties, and particular problems arise where it is contended that one party’s performance is a precondition to the other’s obligation to perform. Secondly, whilst it is now established that all delay in contractual performance amounts to a breach, and therefore yields damages for any resulting loss, questions may arise as to whether the victim of the breach may also cancel the contract, that is, legitimately terminate it. Further questions arise as to the appropriate measure of damages in such cases. The rules here involve issues of performance, breach, and remedies. A series of important appellate decisions in the 1970s and 1980s greatly modernized the subject, and brought it into line with the modern doctrine on the classification of terms and discharge for breach (as discussed in Chapter 20). However the old learning of condition precedents and mutual and independent covenants sometimes lingers.² A shadow is (p. 720) also cast by the distinct history in Chancery, whereby in granting equitable relief a more liberal approach was sometimes adopted to issues of delay in performance. The question whether or not time is of the essence lies at the heart of this topic.³ In the modern law this generally equates to the question whether as a matter of construction or characterization a particular (time) stipulation is a condition or fundamental term, such as to justify termination by the other party in the event of breach. In addition, a distinct power exists where time is not initially of the essence (or it is unclear whether it is) for a party to serve post-contractual notice in appropriate cases of unreasonable delay, making time of performance of the essence, which does not depend on construction or characterization techniques.

25.02  It is sometimes contended that where a date is stipulated for performance in a contract the obligation of the promisor is to perform by or on that date, or within a reasonable time thereafter. Such reasoning is fallacious. The promisor is in breach once the contractual time for performance has elapsed and he is liable in damages for any loss caused by the delay. This was confirmed in the leading House of Lords’ decision of Raineri v Miles.⁴ Lord Fraser of Tullybelton was emphatic:

25.03  Similarly, Lord Edmund-Davies stated:

25.04  The general rule is that time of performance is not of the essence so as to entitle the other side to terminate in the event of even slight delay. This proposition is reflected in the statutory pronouncements, and in the leading case of United Scientific Holdings Ltd v Burnley Borough Council ⁷ which determined that the presumption was, in the context of timetables in rent review clauses, that the deadlines were not of the essence. Lord Simon of Glaisdale expressed the principle very broadly: ‘in general, in modern English law time is prima facie not of the essence of a contract.’⁸ However, first and foremost, it is always open to the parties to make it explicit that time is of the essence, or that it is not of the essence, and the courts will give effect to such expressed intentions, which remove any doubt or uncertainty on the issue. As Lord Diplock stated in United Scientific Holdings:

There is no reported case in which such express provision was ignored by the courts.¹⁰ Secondly, where no express provision is made the courts must determine whether or not time is implicitly of the essence. This appears to be a test of necessary implication, analogous to the implication of terms.¹¹ Accordingly, regard is had to the contract as a whole, the other provisions, the background or context and the purpose of the transaction, and, more narrowly, the timetable in the overall scheme of the contract. It has been suggested: ‘Though the question is still ostensibly one of construction, more emphasis is now placed on the importance of the stipulation within the context of the contract as a whole.’¹²

25.05  Section 61 of the Law of Property Act 1925 provides:

25.06  The predecessor provision to section 41 was part of the critical statutory machinery effecting the fusion of (the administration) of law and equity: section 25(7) of the Supreme Court of Judicature Act 1873.¹³ Accordingly in United Scientific Holdings Ltd v Burnley Borough Council ¹⁴ Lord Diplock described that the 1925 Act was a consolidating measure in respect of this question:

25.07  Lord Simon summarized the modern law in the light of section 41 in these terms:

25.08  Indeed in Lord Simon’s view ‘the fused law has continued to evolve since 1875; and it has developed a more sophisticated approach to contractual terms’.¹⁷ His (p. 723) Lordship envisaged the law developing so that it was for all practical purposes the same as that which resulted from the seminal Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha¹⁸ case:

25.09  With the qualification that the rights in paragraph (b) of Lord Simon’s restatement may be cumulative in a case of serious breach (that is both discharge and damages) it is submitted that this is an accurate statement of the law as it has now developed.

25.10  Section 10(1) and (2) of the Sale of Goods Act 1979²⁰ provides:

25.11  In United Scientific Holdings Ltd v Burnley Borough Council,²¹ having quoted the Sale of Goods Act 1983, Lord Diplock nevertheless insisted that at common law, time of delivery in a sale of goods was treated as of the essence:

(p. 724) 25.12  However leases of business premises were not, despite their commercial character, treated in the same way as these classic ‘mercantile’ contracts. To similar effect, Lord Salmon stated:

25.13  The two appeals to the House of Lords in United Scientific Holdings Ltd v Burnley Borough Council ²⁴ concerned timetables in rent review clauses which had not been complied with, and in respect of which there was no express provision whether or not the stipulations were of the essence. The House of Lords unanimously ruled that the presumption was against time being of the essence. According to Lord Diplock:

25.14  For an application of this approach (where the direction of payment was reversed) see Dominion Corporate Trustees Ltd v Debenhams Property Ltd,²⁶ where Kitchin J rejected a submission that a date for payment by a landlord to a tenant under an agreement for a lease was of the essence. The nature of the subject-matter and the circumstances of the agreement did not render failure to pay punctually a breach which would deprive the other of the benefit of the agreement. In any event, express provision was made for interest on late payments, so the contract provided its own express remedy.²⁷ Furthermore the tenant also failed in its alternative case that the breach was repudiatory, with Kitchin J noting that at no stage had the tenant served notice making the time for payment of the essence.²⁸

25.15  A contribution of the historic rules of equity to the modern subject is the distinct power which exists for a party to serve post-contractual notice in respect of time stipulations which were not initially of the essence once the time for performance had elapsed, making time of performance of the essence.²⁹ It is reflected in the second half of the disjunctive phrase in section 61 of the Law of Property Act 1925: ‘not deemed to be or to have become of the essence.’ This technique does not depend on construction or characterization techniques. According to Lord Simon in United Scientific Holdings Ltd v Burnley Borough Council:³⁰

25.16  Accordingly first, there must be lapse of a reasonable time or undue delay. Secondly, the party serving notice must be ready, willing, and able to perform himself. Thirdly, the stipulated deadline in the notice must itself be reasonable. Lastly, the notice itself must be clear and intelligible as to what is to be done, which is presumably to be judged from the standpoint of a reasonable recipient.³²

25.17  Equity adopted a more forgiving approach to breaches of contractual time stipulations where a decree of specific performance was sought. Even though the party seeking relief was in breach, nevertheless the power was retained to decree specific performance in appropriate cases. Furthermore, prior to the Supreme Court of Judicature Act 1873 an injunction was granted to prevent the victim of the breach bringing parallel proceedings to establish that the contract was discharged in the courts of common law. However even equity would only intervene where ‘lapse of time is not essential to the substance of the contract’.³³ Here equity either took a narrower view of when time was of the essence than the common law, or at least perceived that it took a narrower view.³⁴ In the wake of section 25(7) of the Supreme Court of Judicature Act 1873, which entrenched the equitable approach as the governing law, Lord Parker of Waddington in Stickney v Keeble³⁵ attempted to summarize the position:

25.18  The position has now been reached in English law, in the wake of United Scientific Holdings Ltd v Burnley Borough Council ³⁷ that where time is expressly of the essence³⁸ or, it is submitted, is so by reason of necessary implication, no jurisdiction to grant equitable relief exists. This appears from the importance attached to contractual certainty by the Privy Council in an advice delivered by Lord Hoffmann in Union Eagle Ltd v Golden Achievement Ltd.³⁹

25.19  A number of statutory rules for calculating time were considered in Chapter 7 on presumptions.⁴⁰ At common law the ordinary principles of construction apply. In Zoan v Rouamba⁴¹ Chadwick LJ observed:

25.20  Where the phrase ‘beginning with’ precedes a certain date, the date specified is generally included in the calculation of time. In Zoan v Rouamba⁴³ Chadwick LJ stated:

The Court of Appeal applied this approach to the construction of a contract.

25.21  Where either ‘after’ or ‘from’ is used (the two prepositions are treated as synonymous) the date specified is generally excluded from the calculation of time. In Zoan v Rouamba⁴⁵ Chadwick LJ stated:

(p. 728) 25.22  Subsequently, Chadwick LJ clearly indicated:

25.23  ‘Within’ generally includes the whole of the specified period up to and including the stroke of midnight. In Manorlike Ltd v Le Vitas Travel Agency and Consultancy Services Ltd ⁴⁹ Nourse LJ commented:

25.24  Kerr LJ concurred:

25.25  In Ketley v Gilbert ⁵² the Court of Appeal held that a requirement for a payment ‘on the expiry of’ 12 months did not fall within the statutory exemption for certain consumer credit agreements where payments were made ‘within a period not exceeding 12 months beginning with the date of the agreement’⁵³ because it could not reasonably be expected that payment would take place on the stroke of midnight, but within a reasonable time thereafter.