Is Time Really of the Essence in Construction Contracting?
Ken Adams over at Adams Drafting has continued his discussion regarding “time is of 
the essence” clauses in contracts. Today’s entry is an excellent discussion of the application of these clauses in the construction contracting where it is understood that delays are going to occur and are, quite possibly, just the natural course of any project.
His point is well suited to Illinois as well. While we see these provisions can have enforcement in real estate and other transactions:
“Third, we find that the trial court properly held that defendants' enforcement of the “timeis of the essence” provision in condition 7 of the contract was proper. Parties to a contract may make “timeis of the essence” a provision of the contract. A court will give effect to this provision when no peculiar circumstances have intervened to prevent or excuse strict compliance. The extent to which a court will enforce a timeis of the essence provision depends upon the intent of the parties as determined by language used in the contract and the circumstances surrounding the agreement.” Maywood Proviso State Bank v. York State Bank and Trust Co., 252 Ill.App.3d 164, 625 N.E.2d 83 (1 Dist.,1993).
Illinois courts tend to recognize and accept the arguments that construction contracts are different beasts in this realm and that some delay in projects is inherently reasonable:
“The Claimant, TWC, has argued that it should receive $91,795 for damages on the site utilities contract, $399,988 on the heating contract, and $218,146 on the ventilation contract. Most, if not all, construction projects will have some delays. Projects with multiple contractors requiring coordinated efforts are more likely to have delays. In this case, the majority of the delays are attributable to the architect-engineer and CDB. Much less delay is attributable to the contractors. For a delay to be tolerated, it must be reasonable under the circumstances. Much of the delay on this project was beyond reasonable. As this Court [has previously found]we do not believe that the damages are computable to the penny as Claimants have tried to show. With the fact that some delay is reasonable and inevitable and the inherent speculative nature of computing losses in construction cases, we must try to find a fair figure for damages after weighing the evidence as is the Court's responsibility.”McCarthy Bros. Co. v. State, 47 Ill.Ct.Cl. 15, (1995).
Given the inherent nature of delay it is no wonder that many contracts now advance certain steps or actions as the marking points for different phases of completion and allow for an Architect or other actor to certify substantial completion. The current method is by far preferable to all parties involved and means we don’t have to bother courts with re-hashing the understanding that the construction process is different from other arenas.
However, Ken’s point about the lack of utility in these provisions is well taken, especially when many manuscript contracts contain the sentence.
