Real Estate Law
I am no lawyer and am not giving you legal advise. If you need legal advice get it from a legal professional. I found this very interesting article on Real Estate Contracts from the commercial law blog
Time Really is of the Essence
Many agreements for the sale of property include provisions that “time is of the essence”. This means that the time set for the performance of the various obligations of the parties under the contract is an essential term of the contract. However, what happens when a party to a contract which includes a time is of the essence provision fails to fulfill one of its obligations in the time period specified? Is this a ‘fundamental’ breach which the non-defaulting party can rely on to terminate the contract, regardless of whether the breach was subsequently rectified?
In the recent decision in 1473587 Ontario Inc. v. Jackson (74 O.R. (3d) Part 7, 539-550; appeal dismissed by the Ontario Court of Appeal, 75 O.R. (3d) 484) the Ontario Superior Court of Justice considered the following scenario: a major grocery store operator entered into an agreement of purchase and sale which provided that a deposit was to be paid within five days of acceptance of the agreement. However, through oversight on the part of the purchaser, the deposit was paid a few days later than stipulated. The purchase agreement included a time is of the essence provision, and the vendor took the failure of the purchaser to deliver the deposit on time to mean that the agreement was at an end and entered into an agreement to sell the property to another purchaser. The original purchaser sought a summary judgment for specific performance.
In deciding whether to require specific performance, the court considered, among other things, whether the intention of the parties was to be able to rely on strict compliance with the terms of the agreement. The applicable provisions read as follows:
21. This offer, when accepted, shall constitute a bind contract of purchase and sale, and time in all respects shall be of the essence of this Agreement.
22. Time shall be of the essence of this Agreement, but no extension of time for the making of any payment or the doing of any acts hereunder shall be deemed to be a waiver or modification of or affect this provision.
The Court found that these provisions clearly required that any breach of any of the obligations set out in the agreement requiring performance at a particular time amounted to the breach of an essential element of a contract. The failure of the purchaser to deliver its deposit at the specified time period amounted to the breach of an essential term of the contract which the vendor did not waive and which it was entitled to treat as ending the agreement regardless of the fact that the purchaser displayed every intention to complete the contract and in fact cured the breach shortly thereafter.
In light of the foregoing, all time-sensitive obligations in contracts which include time is of
the essence provisions should be strictly complied