June 12, 2025
We have written before to comment on “time is of the essence” clauses in real estate contracts.
THE ISSUE
Our recent article commented on a case where the Ontario Court of Appeal strictly applied the concept of a strict time limit. In that case, the buyers were 35 minutes late in tendering funds and were found to be in breach of contract.
What about 9 minutes late?
What about if the money was actually wired before the deadline, but not received until after?
THE CASE
In Correa v. Valstar Homes (Oakville Sixth Line) Inc. the deadline was 5:00. The buyers’ lawyer wired funds at 4:52, but they were not received by the seller’s lawyer until 5:09.
The Court of Appeal agreed with the motions judge that the buyers were in breach of contract and that the seller was entitled to treat the contract as ended.
The seller offered to revive the contract if the buyers paid a $100,000.00 increase in price. The buyers agreed and then sued for return of the $100,000.00.
The buyers relied on the doctrine of good faith performance of contract to argue that the seller’s position was unfair and unsustainable. This argument was not successful. It does not allow a party to ask the court to “re-write the agreement”.
The offer to revive the contract was not improper. Courts will generally not enforce penalties for breach of contract in the absence of damages, but the courts in this case found that the offer to sell for $100,000.00 was not a penalty, because it was an offer to form a new contract.
They also rejected the theory of economic duress- the buyers:
- did not pay under protest;
- had independent legal advice;
and any economic pressure the seller exerted was justified because they were entitled to rely on the “time is of the essence” clause.
Unlike the recent case we previously commented upon, the degree of sophistication of the buyers was not considered.
The courts distinguished another recent case about “time of the essence” clauses that involved a deadline that was less precise.
TAKEAWAYS
- This case re-emphasises that “time is of the essence” clauses may be enforced even if the result seems to be harsh.
- Having seen two recent decisions on similar themes suggests that courts will not be as forgiving as we might otherwise think.
- The wording of the contract matters.
- “Time is of the essence” should be taken seriously.
HOW WEILERS LLP CAN HELP YOU
Our team of experienced commercial and real estate lawyers take the time to understand your deal and watch for hidden pitfalls. We take the time to make sure that you review the agreement and discuss it with you to spot any additional concerns.
If you are unlucky enough to have a lawsuit over your agreement, our litigation team is skilled at locating, assembling, and presenting the evidence in the best possible way to attempt to assist you to claim the moral high ground favoured by the courts.
Whether you are entering into a new commercial or residential real estate deal, or in a dispute at the end of the deal, please call us and see if Weilers LLP are the right lawyers for you.