A purchase agreement for a Dickinson, North Dakota property is signed by both parties on March 1. The agreement specifies a closing date of April 30 but does not contain a 'time is of the essence' clause. On April 30, the seller is not ready to close due to a title issue and requests a two-week extension. The buyer refuses and demands the seller close immediately or be declared in default. Under North Dakota contract law, which statement is most accurate?
Correct Answer
A) Without a 'time is of the essence' clause, the April 30 date is a target date, and the seller has a reasonable time beyond that date to perform without being in default
Under North Dakota contract law, when a purchase agreement specifies a closing date but does not include a 'time is of the essence' clause, the specified date is treated as a target date rather than an absolute deadline. Without the 'time is of the essence' designation, courts allow a reasonable additional time for performance. The seller's request for a two-week extension to resolve a title issue would likely be considered reasonable, and the buyer cannot immediately declare the seller in default simply because the closing did not occur on the exact specified date.
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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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