A purchase contract requires closing by June 15 and contains a specific clause stating that all dates in the agreement are non-negotiable conditions of performance. The buyer's lender experiences a small underwriting delay, and the buyer asks to push closing to June 17. The seller refuses, declares the buyer in breach for missing the June 15 date, retains the earnest money, and relists the property. A court asked to evaluate the seller's two-day cancellation looks first at one specific contractual provision that elevated each deadline from a flexible target to a strict, material condition. Which provision in the contract supported the seller's strict cancellation?
Correct Answer
B) Time is of the essence clause
The clause converted every contractual date into a strict, material condition, giving the seller the right to declare a breach and cancel after a two-day delay. That clause is a 'time is of the essence' clause, which transforms deadlines from flexible targets into bright-line requirements.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
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