In the standard form Agreement of Purchase and Sale (“APS”), timing is everything. The Ontario Real Estate Association’s (“OREA”) general form APS, states the following:
“Time shall in all respects be of the essence hereof provided that the time for doing or completing any matter provided for herein may be extended or abridged by an agreement in writing signed by Seller and Buyer or by their respective lawyers who may be specially authorized in that regard.”
This can be easy to forget from time to time, given that the custom in the industry tends to be less mindful of timing. For example, when a would-be purchaser provides their deposit a day or two late, the custom in the industry is to waive the breach and treat the APS as ongoing and valid.
The Courts, however, have found that while this may be the custom, the “time of the essence” clause means that timing is an essential term of the contract. Therefore, to the extent that a deposit is delivered late, the courts have viewed this as an essential, not trivial, breach which discharges the contract.
The leading case in this regard is 1473587 Ontario Inc. et al. v. Jackson et al.,  74 OR (3d) 539 (SCJ), affirmed  75 OR (3d) 484 (CA). In that case, Loblaw signed an APS as the purchaser. The APS made “time of the essence” and Loblaw was obligated to pay a deposit five days after acceptance. Through inadvertence, Loblaw did not pay the deposit until 7 days later than stipulated in the APS. The seller treated the APS as discharged and negotiated a second APS with another purchaser. Loblaw brought an action seeking to enforce its original APS, and moved for summary judgment for specific performance.
In his reasons, Justice Rutherford determined that Loblaw’s claim had to fail. He determined that the APS “clearly signaled that any breach of any of the obligations in the agreement calling for performance at a specified time amounted to the breach of an essential element of the contract.” Though Justice Rutherford recognized that it might seem unfair or unfortunate to Loblaw, the sellers were entitled to treat the APS as discharged and they were released from their obligations under it given that there was no fault or deception on their part. It did not matter that the deposit was only a few days late, or that it was a result of Loblaw’s inadvertence. Justice Rutherford held that the law is clear.
This is worthwhile to remember when entering into any agreement where time is of the essence. If something needs to be done by a certain date, it is important to ensure that it is done correctly by that time, otherwise the agreement, as a question of law, is over. While custom might hold otherwise, at law, timing is everything.