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Review Your SQE 1 Practice Records

Examination Timing: 00H00M05S

Your client, a fast-food company, is entering into an agreement with a supplier for one of its key ingredients. Without this ingredient, your client will be unable to produce and sell its product. Accordingly, you are instructed to ensure the contract includes obligations that performance must be completed as scheduled, and that failure to do so will allow your client to terminate the contract and claim damages. 

Which of the following clauses should you include in the contract?

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Your selected option: C

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A 'time of the essence' clause means that the completion of the obligation to be performed is time critical to the contract. Breach of that term usually entitles the other party to terminate the agreement and claim damages. Including this clause will ensure that the supplier understands the critical nature of timely delivery, giving your client the right to terminate the contract and seek damages if the supplier fails to perform as scheduled. 

Key Point: 'Time of the essence' clauses make timely performance a fundamental term of the contract, allowing for termination and damages upon breach.

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