Business Law Series: Contracts – Time for Performance

Key Contract Terms Part 3: Time for Performance

Have you ever hosted or attended an event that had no start time? People may eventually show up, but will they show up on the day or at the time it is actually happening? An event with no date or start time is like a contract with no time for performance. It might happen, but most likely not when and how you expected.

In our last blog, we discussed important pricing provisions necessary to include in business contracts to ensure pay expectations from each party involved. This month in our Business Law Series on Key Contract Terms, we discuss the importance and means of clearly establishing when each party is to perform their respective duties under the contract.

Time for Performance

Entering into a contract is a significant part of every business’s operations.  An important but often overlooked aspect of a contract is the timeline for performance, in other words, the timeframe in which each party is required to fulfill their obligations under the agreement. In this blog, we will provide guidance on how to handle the timeline for performance in a contract.

FIRST: Establish Clear Deadlines

Once you determine what each party is bringing to the table—cash for services, cash for goods, or some other combination of exchanges—it is important to set clear deadlines and guidelines to establish when each party must perform. This means setting specific dates or benchmarks by which each party must perform their obligations. A simple example is a construction contract specifying the date and time when the contractor must commence and then complete its work.

When setting deadlines, it is important to consider the nature of the transaction and the complexity of the obligations involved. For example, a contract for the sale of goods may require a shorter timeline than a contract for the delivery of services; or a contract for a complex project may require performance in phases from both parties or include performance of work by third parties. It is also critical to ensure that deadlines are reasonable and achievable, as unrealistic timelines can result in breaches of contract and legal disputes.  Furthermore, reasonable timeline provisions should account for force majeure events, which we will discuss in more detail below.

SECOND: Include Penalties for Late Performance

In addition to setting clear deadlines, it is beneficial to include clear and reasonable penalties for late performance in the contract. Penalties provide an incentive for each party to complete their obligations within the specified timeframe and serve as a deterrent against breaches of contract.  They also provide a means for the parties to resolve disputes amicably (or more amicably), as the consequences for non-performance or delayed performance are agreed to ahead of time.

Penalties can take many forms, such as financial compensation or the loss of certain rights or privileges.  For example, if a deadline for performance is missed, a per diem delay amount can be set in the contract and applied to reduce the final payment. It is important to consider the severity of the penalty in relation to the obligation being performed. For example, a minor delay in the delivery of goods may warrant a smaller penalty than a delay in the delivery of critical services.

When establishing penalties, it is also important to consider if there are laws that are specific to whether the contract is between businesses and individuals, or if the subject matter of the contract relates to an industry with unique rules and regulations. This is because certain state and federal laws may require grace periods or set a floor or ceiling to the penalty amount or percentage. 

THIRD: Have a Plan for both Foreseeable and Unforeseeable Delay

Contracts should account for unforeseeable delays with force majeure clauses. Force majeure clauses are provisions in a contract that excuse one or both parties from fulfilling their obligations due to unforeseeable circumstances beyond their control. These circumstances may include natural disasters, wars, labor shortages, supply chain issues, or other events that make performance impossible or impracticable.  Before you decide against accounting for these contingencies due to their rarity, let’s not forget COVID-19 and its long-term far-reaching effects.

Including a force majeure clause in a contract can provide protection against unforeseen circumstances that may impact the timeline for performance. It is important to ensure that the clause is narrowly tailored and includes specific events that qualify as force majeure. It is also essential to consider the impact of force majeure events on the contract and any penalties or remedies provided for in the agreement.  For example, a force majeure clause may allow for delayed performance without penalty but may not excuse complete non-performance.

Still, some delays are common and foreseeable—for example, rain delays for construction projects.  When relevant, timeline provisions should identify which delays will be considered reasonable, how the cause of the delay should be reported, and whether the timeline will be adjusted without penalty.

FOURTH: Maintain Clear Communication

Finally, clear communication is key to handling the timeline for performance in a contract. Maintaining clear communication can help to identify issues early and resolve disputes before they escalate. It can also help to build trust and ensure that each party is working towards the same goal.


Handling the timeline for performance in a contract is critical to the success of any transaction. By establishing clear deadlines, including penalties for late performance, considering delays in advance, and maintaining clear communication, businesses can ensure that their obligations are fulfilled within a reasonable timeframe while mitigating the risk of legal disputes.

If you are interested in speaking with an attorney about handling the timeline in your contract please contact the business law attorneys at Skufca Law at (704) 376-3030.

Up Next: Changes or Modifications to Contracts

Stay tuned for our next blog in the Business Law Series: Key Contract Terms where we will discuss how to plan for potential changes and modifications to the contract after both parties have signed the original contract and begun performance.