Making time of the essence

Alegrow v Yayla Agro (High Court) [2020]

‘Time of the essence’ is a common phrase in commercial contracts, but it is frequently misused. It is often not appreciated that time of performance will not be ‘of the essence’ unless explicitly made so. Questions then arise as to how ongoing delays in performance can be sufficient to justify termination


The claimant (‘Alegrow’) entered into a contract with Yayla for the sale and delivery of a quantity of rice. The rice had to comply with a very specific set of requirements. Shipment was to be between 1 September and 15 December 2016. By early December 2016, approximately half of the cargo had been shipped. Yayla emailed Alegrow asking for an amended shipment schedule for the remaining rice, stating that the latest date for shipment was to be 31 December 2016. Alegrow failed to ship the remaining rice by the end of December 2016. Yayla repeated its request for an amended shipment schedule on 27 December 2016 and 20 January 2017.

On 29 March 2017 Yayla again asked Alegrow to provide, by close of business on the following day, 30 March, a schedule for shipment of the remaining rice, this time for it to be shipped by 15 April 2017. When Alegrow did not provide a schedule as requested or deliver the outstanding quantity of rice, Yayla referred the matter to arbitration which effectively brought the contract to an end.

The dispute between the parties was first heard by an arbitration Tribunal established by the Grain and Feed Trade Association and then subsequently on appeal to an Appeal Board.

Alegrow, being unhappy with the conclusions of the Appeal Board, appealed again to the High Court. The precise questions which were the subject of the appeal were very fact specific and therefore not of broader interest. However, the High Court did usefully summarise the rules regarding making time of the essence and the circumstances in which an innocent party who purports to terminate early can find itself having committed a repudiatory breach entitling the party which was originally in breach to themselves terminate and claim damages.


The Court summarised certain fundamental principles relating to ‘time is of the essence’ in a contract. In particular the court quoted an Australian case “Delay beyond the [contractually stipulated] date will [only] give rise to a liability in damages. Because equity treats the time stipulation as non-essential, mere breach of it does not justify rescission by the innocent party. Unreasonable delay amounting to a repudiation is essential to justify rescission. It is to this end that, following breach, the innocent party gives notice fixing a reasonable time for performance. The result of non-compliance with the notice is that the party in default is guilty of unreasonable delay. The unreasonable delay amounts to a repudiation and this justifies rescission":

Following these principles, the Court found that if the Board intended to conclude that the 29 March email made time of the essence by requiring shipment by 15 April, then:

it would have needed to find that the period from 29 March to 15 April was a reasonable period for shipment of the balance of the rice; and any repudiatory breach would have occurred only on or after 15 April.

The Court held that Yayla had in fact renounced the contract by its notice of arbitration (thereby bringing the contract to an end) and was thus in breach, allowing Alegrow to claim damages even though it had failed to fulfil its contract to supply.

Points to Note:

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