Construction contracts invariably lay out deadlines for the contractor to meet, such as a start date and a date for substantial completion. Specific deadlines in black and white may give the unwary homeowner a sense of security that the deadlines will be met or constitute a breach of contract. Unfortunately, homeowners often learn the hard way that construction deadlines are not necessarily hard deadlines unless the contract contains the magic words “Time is of the Essence.”
Texas law provides not all contract breaches are actionable and for there to be a default of the contract there must have been a material breach. Unless the breach is material, there is no breach of contract. Texas law further holds that missing a date, such as a start date or a date for substantial completion in a construction contract, does not constitute a material breach. For example, a homeowner who contracts with a roofing company to have her roof repaired in 30 days will not have a claim against the roofing company simply because it fails to meet that deadline. In other words, just because your contractor failed to meet a deadline you agreed to does not mean a court will find a material breach occurred.
The court will likely instead review the facts to determine whether the roofing company met its contractual obligation within a reasonable time period. Clearly a breach occurred by missing the deadline, but not every breach is material. Whether a breach constitutes a material breach is generally dependent on the specific facts of the case. This scenario can be infuriating for the homeowner. If the contract says construction must be complete by May 15th, doesn’t that mean construction must be complete by May 15th?!?
In other words, just because your contractor failed to meet a deadline you agreed to does not mean a court will find a material breach occurred.
Thankfully, the Texas Supreme Court provided a solution to this scenario. In Mustang Pipeline Co. v. Driver Pipeline Co., the contract stated that Driver Pipeline had a completion deadline of April 30, 1997 to install 100 miles of pipeline. The contract also included a time is of the essence clause. Driver Pipeline failed to meet the deadline, and Mustang Pipeline filed a lawsuit. The court ruled that missing a contractual deadline does constitute a material breach when the contract includes a “time is of the essence” clause. These magic words have a tremendous impact on both performance and remedies.
With the current high rate of residential construction projects, right now would be a good time for homeowners to make sure their contracts have a time is of the essence provision. Without it, the homeowner could find out the deadlines she agreed to with the contractor are more like guidelines. And it is always a good idea to have a construction law attorney review the contract for any other provisions that could give the homeowner heartburn down the road.