California Real Estate SalespersonContractsMedium
A purchase agreement includes a clause stating 'time is of the essence' and requires the buyer to remove all contingencies by June 1. The buyer fails to remove contingencies until June 5, with no extension granted by the seller. What is the legal effect of this delay?
- AThe seller may treat the contract as breached and may be entitled to cancel
- BThe contract automatically converts to a month-to-month agreement
- CThe buyer's delay is excused because contingency removal dates are not enforceable
- DThe delay is immaterial because California law allows a 5-day grace period
Show answer & explanationAnswer & explanation
Correct answer: A. The seller may treat the contract as breached and may be entitled to cancel
A 'time is of the essence' clause makes strict compliance with stated deadlines a material term of the contract. Missing the deadline without an agreed extension constitutes a breach, giving the seller the right to cancel or pursue remedies.
Why the other options are wrong
- B. Incorrect—contracts do not automatically convert to a different type upon a missed deadline.
- C. Incorrect—contingency removal dates are enforceable, especially when time is of the essence.
- D. Incorrect—there is no statutory 5-day grace period for time-is-of-the-essence deadlines.
Time is of the Essence
A contract clause specifying that stated deadlines are material terms, requiring strict and timely performance; failure to meet them constitutes a material breach.
- Makes deadlines legally binding and strictly enforced.
- Missing such a deadline can allow the other party to cancel the contract.
- Without this clause, courts may allow reasonable delays without automatic breach.
Memory trick: When time is 'of the essence,' late means breach—no grace period.