On Or About Vs. Time Is of the Essence
Understand the critical differences between ‘on or about’ and ‘time is of the essence’ clauses to protect your contractual interests
Time Terms in Real Estate
Time related legal clauses and terms can be very important in real estate agreements, such as closing dates, contingency periods, and payment schedules. Missing these deadlines and notice periods can have significant consequences. This is more relevant in regions where time is of the essence dates are commonly used, like Washington. In these markets, dates serve as hard deadlines. But things work differently in other regions. Another common type of date is an “on or about” date, which is more of an estimate that permits either party to reschedule as needed. Which type of date is the norm is largely a matter of local custom, but the parties are free to specify their own terms. In this article, we discuss some of the more significant differences and how they can impact transactions.
Time is of the Essence
A “time is of the essence” clause underscores the importance of adhering to contractual deadlines, making the specified dates and times critical to performance. Failure to meet these deadlines can lead to contract termination, penalties, or damages. Since time is considered a material term, there is minimal flexibility to adjust the timeline once the contract is in effect. However, the enforceability of such clauses may depend on the nature of the agreement and the circumstances surrounding any delays. For example, a party cannot cause a delay for the purpose of causing the other to miss a deadline.
Features of TOE Contractual Dates
The strictness of deadlines is coupled with additional contractual language to:
1. Encourage the parties to respond to correspondence timely.
2. Promote certainty in transaction timing.
3. Provide an aggrieved party certainty by specifying their remedies for if a date is missed.
On or About
Unlike “time is of the essence” clauses, “on or about” clauses assume flexibility treating dates more like targets or estimates rather than as deadlines. Compared with TOE dates, these allow for minor delays with minimal consequences for either party. The parties are always able to agree to extensions, that’s true no matter what type of dates are used. But, if the parties do not agree, then an on or about date can generally be pushed back for a “reasonable” time. What is reasonable can sometimes be disputed and will largely vary based on the specifics of the transaction, delay, and reason for delay.
Features of On or About Contractual Dates
The flexibility of on or about dates can:
- 1. Allow for minor delays without significant legal consequences for either party.
- 2. Provide more opportunities for curing minor defects.
- 3. Encourage the parties to maintain open lines of communication because both must be prepared to close before a date can be finalized.
Other Contractual Dates and Timeframes
Contingency periods refer to timeframes within which certain conditions (like financing approval or inspections) must be met for the contract to proceed. Notice periods specify how much advance warning a party must give before taking certain actions, such as termination. The way days are counted can vary too. For example, the NWMLS form purchase and sale agreement defines different methods of counting days for different terms and lengths. It is also common for the last day of notice period falling on a holiday or weekend to be extended to the next business day.
Practical Considerations
When choosing or defining dates, here are some things to keep in mind:
Mindful Tracking
Dates play an important role in contract management, legal matters, and financial obligations. Tracking and recording key dates—such as deadlines, renewal dates, compliance due dates, and notice periods—helps prevent missed opportunities and penalties minimizing risk.
Clear Language
There should be no ambiguity about dates. Regardless of what types of dates the parties use, the language of the agreement should be clear with only one reasonable interpretation.
Risk Mitigation
Pay careful attention to the impact dates and types of dates have upon bargaining position. A party uncertain about closing takes on more risk with TOE dates while, by contrast, a party relying on the transaction to close takes on more risk with on or about dates.
Notice and Computation
It is also worth noting what procedural steps are required for notices or other actions to be effective for the purpose of satisfying date requirements—An improperly formatted notice sent on the last day may be invalid, leaving the term the notice sought to exercise no longer available. Likewise, counting days incorrectly and waiting until the last day can also result in missed opportunities
Disclaimer
This article is provided for informational, educational, and marketing purposes only and does not constitute legal advice. The content is current as of its publication or last review and may not reflect the latest legal developments. Do not rely solely on this information—consult a qualified attorney regarding your specific situation.
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