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What about delayed delivery because of Covid-19?
H. Roske & Associates LLP, March 23rd, 2020.
If the delivery contract or the general terms and conditions -- both can have the same goal -- are based on common law, which is the international standard and is also recommended for companies from the DACH region, then the so-called Time-is-of-the-Essence clause is important. This is a business slang term in the USA for default and the clause is one of the 5 pillars of international contractual risk management and is probably included in all major corporate policies of American companies as an absolute 'must'.
"In the event that the parties agreed upon a specific time for delivery, however, time shall not be of the essence, and seller shall only be obligated to deliver within a reasonable time after such delivery date".
One can see that the clause should actually be rather called Time shall not be of the essence.
What is a 'reasonable time' depends on the case law in the respective industry segment, combined with its commercial practices. In the automotive supply sector with its just-in-time deliveries, it has almost never been possible to enforce the clause, in other sectors you get about 1 week to 10 days grace period, and in today's corona time we do not know because there are no decisions on this yet. In any case it is good to use such a clause, otherwise you are fully liable for all damages caused by delay.
"In the event that the parties agreed upon a specific time for delivery, however, time shall not be of the essence, and seller shall only be obligated to deliver within a reasonable time after such delivery date".
One can see that the clause should actually be rather called Time shall not be of the essence.
What is a 'reasonable time' depends on the case law in the respective industry segment, combined with its commercial practices. In the automotive supply sector with its just-in-time deliveries, it has almost never been possible to enforce the clause, in other sectors you get about 1 week to 10 days grace period, and in today's corona time we do not know because there are no decisions on this yet. In any case it is good to use such a clause, otherwise you are fully liable for all damages caused by delay.