California Real Estate Broker ExaminationContractsMedium
A buyer enters into a purchase agreement for a property. The agreement specifies that the buyer must obtain a loan commitment within 21 days. If the buyer fails to meet this deadline, and the seller chooses to terminate the contract, which legal principle allows the seller to do so without being in breach?
- ATime is of the essence
- BParol Evidence Rule
- CStatute of Frauds
- DDoctrine of Estoppel
Show answer & explanationAnswer & explanation
Correct answer: A. Time is of the essence
When a contract includes a 'time is of the essence' clause, it means that timely performance is a material term of the contract, and failure to perform by the specified date can result in a breach and allow the non-breaching party to terminate.
Why the other options are wrong
- B. The Parol Evidence Rule prevents the introduction of oral testimony that contradicts the terms of a written contract.
- C. The Statute of Frauds requires certain contracts, including real estate contracts, to be in writing to be enforceable.
- D. The Doctrine of Estoppel prevents someone from asserting a claim or right that contradicts their previous actions or statements.
Time is of the Essence
A contract clause emphasizing that timely performance by a specific date is a critical and material term, and failure to meet the deadline constitutes a breach.
- Makes deadlines strictly enforceable
- Failure to meet deadline can lead to contract termination
- Common in real estate contracts for closing dates, contingencies
Memory trick: 'Time is of the essence' means 'Don't be late, or it's too late!'