A contract of sale contains a clause stating 'Time is of the essence' regarding the settlement date. The purchaser is unable to settle on the specified date due to delayed finance approval. What is the most likely legal consequence?
Correct Answer
C) The vendor may terminate the contract and keep the deposit
When 'Time is of the essence' is specified in a contract, strict compliance with time limits is required. If the purchaser fails to settle by the specified date, this constitutes a fundamental breach allowing the vendor to terminate the contract, retain the deposit, and potentially claim additional damages.
Why This Is the Correct Answer
When time is of the essence, the settlement date is an essential term. A purchaser who fails to settle on that date is in breach of an essential term, which allows the vendor to terminate and keep the deposit, subject to the contract's terms.
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A contract of sale in Queensland contains a clause stating 'time is of the essence' regarding the settlement date. The purchaser is ready to settle but the vendor cannot provide vacant possession until three days after the contractual settlement date due to tenant issues. What is the most likely legal consequence?