The Law on Time as Essence in Construction Contracts: A Critique
RGNUL Financial and Mercantile Law Review, Volume VIII, Issue 1, p. 1-36 (2021)
36 Pages Posted: 19 Apr 2021
Date Written: December 10, 2020
The concept of time as essence in construction contracts is a controversial topic. Even though parties routinely provide in their agreements that time is of the essence, these clauses inevitably figure in construction disputes. Arbitral tribunals and courts have mostly decided such disputes holding those clauses to be of no legal effect, mainly by relying on the decision of a three-judge bench of the Hon’ble Supreme Court in Hind Construction Contractors v. State of Maharashtra. This paper argues that Hind Construction was wrongly decided, that it is not good law and that it requires reconsideration given the changing times. The paper further notes that parties do not appear to have circumvented the adverse effect of Hind Construction. Usually, in such situations, there is a change in contracting behaviour by the use of appropriate contracting language. Perhaps, this is due to the lack of direction by courts as to what appropriate language could be used in contracts to make time as the essence of the contract. This paper concludes by suggesting possible methods by which courts and arbitral tribunals could validly enforce time-as-essence clauses.
Keywords: Construction Contracts, Contract Law, Termination, Time as Essence, Hind Construction v Maharashtra
JEL Classification: K1, K4, K12, K19
Suggested Citation: Suggested Citation