In an Alberta purchase contract, the completion day is set for a Friday, but the buyer's mortgage funds are delayed and will not be available until Monday. What are the legal consequences?

Q: What is the correct answer to: In an Alberta purchase contract, the completion day is set for a Friday, but the buyer's mortgage funds are delayed and will not be available until Monday. What are the legal consequences?

The correct answer is Time is of the essence in AREA contracts; the buyer is in breach and the seller may be entitled to damages including late completion penalties. AREA purchase contracts contain a 'time is of the essence' clause, meaning every date is a strict deadline. Under Alberta law, failure to complete on the specified day constitutes breach of contract. The seller may claim late completion penalties as specified in the contract and, in serious cases, may terminate the contract entirely.

Q: What background knowledge is needed for this Contracts & Agreements question?

In Alberta contract law, 'time is of the essence' means deadlines are firm conditions, not guidelines. The AREA purchase contract explicitly includes this clause. Late completion can trigger per-diem penalties, require the buyer to cover the seller's additional carrying costs, and in extreme cases allow the seller to terminate.

Q: What is a good way to remember the answer to this Contracts & Agreements question?

ESSENCE = Every Single Second ENforced, Closing Essential. Missing closing day by even one day is a breach under AREA contracts. When you see a question about missed deadlines in AREA contracts, immediately recall 'time is of the essence' — late equals breach, always.

Q: What exam tip applies to this Contracts & Agreements question?

Any answer suggesting automatic extensions or shared costs contradicts the time is of the essence clause. Late completion is always a breach in AREA contracts.

Q: How does this Contracts & Agreements concept apply in real world practice?

A buyer's mortgage funds are delayed until Monday but completion was Friday. The seller incurs weekend bridge financing costs and moving storage fees. The buyer must pay late completion penalties per the contract and reimburse the seller's additional costs caused by the delay.

Question

Contracts & AgreementsABHARD

In an Alberta purchase contract, the completion day is set for a Friday, but the buyer's mortgage funds are delayed and will not be available until Monday. What are the legal consequences?

Answer Options

A

The completion date automatically extends to the next business day

B

Time is of the essence in AREA contracts; the buyer is in breach and the seller may be entitled to damages including late completion penalties

C

The seller must wait until Monday without any penalty to the buyer

D

Both parties automatically share the cost of the delay equally