Time of the essence? Contractual interpretation

In Intergraph (UK) Ltd v Wolfson Microelectronics plc ([2012] EWHC 528 (Ch)) a lease contained a break clause but the tenant did not comply with the pre-condtitions to be complied with before the break right could be exercised. The lease made time of the essence for exercise of the break right. Nevertheless, the parties agreed amended terms under which the break clause could be exercised. These terms were included in a formal agreement and provided for payment to be made on or before a specified date. By mistake, the tenants failed to make the payment and they immediately offered to make the payment when they became aware of the mistake. The landlords refused to accept. The question was whether time was of the essence for making the payment; it had not been made expressly of the essence. The court held that it was. This was a question of the proper interpretation of the contract. The language and structure of the agreement tied it firmly to the break clause in the lease (where time was expressly of the essence). This interpretation also made the best commercial sense of the agreement.

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