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You are here: Home / Business / The essence of time of the essence

By McCarthy Tétrault LLP | 2 Minutes Read June 7, 2019

The essence of time of the essence

time of the essence

In a recent Ontario Court of Appeal decision (Di Millo v. 2099232 Ontario Inc. (2018), 99 R.P.R.(5th) 1) the Court considered what a “time is of the essence” provision means in the context of an option to purchase. In this case the option granted a vendor the right to re-purchase a property if a specified industrial building wasn’t built within a prescribed time. What is crucial is that the option did not provide for a time period after the failure to build during which it could be exercised. 

The application judge found that waiting 6 months after the option was exercisable did not respect the time of the essence provision and therefore the option had not been properly exercised. 

The Court of Appeal disagreed – a time of the essence provision does not mean a party has to move quickly (as it does in conversational English) – rather it means that time periods in the contract have to be strictly adhered to. In this case where no time limit was specified the vendor had a reasonable period of time to exercise the option once it became exercisable. The Court found that in all of the circumstances 6 months was a reasonable period of time and therefore the option had been validly exercised.

It is always preferable to specify an option exercise period – but if you don’t, the essence of this case is the Court will imply a reasonable one, whether or not time is of the essence.

By Abraham Costin

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McCarthy Tétrault LLP
McCarthy Tétrault is a Canadian law firm that offers a full suite of legal and business solutions to clients in Canada and around the world. They deliver integrated business, litigation, tax, real property, and labour and employment solutions through offices in Vancouver, Calgary, Toronto, Montréal, Québec City, New York and London, UK.
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Article by McCarthy Tétrault LLP / Business, Finance and Accounting / contract for purchase and sale, time of the essence, vendor rights

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About McCarthy Tétrault LLP

McCarthy Tétrault is a Canadian law firm that offers a full suite of legal and business solutions to clients in Canada and around the world. They deliver integrated business, litigation, tax, real property, and labour and employment solutions through offices in Vancouver, Calgary, Toronto, Montréal, Québec City, New York and London, UK.

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