Question

Business Law Question

The Bassos contracted with Dierberg to purchase her property for $1 ,310,000. One term of the contract stated, "[t]he sale under this contract shall be closed . . . at the office of Community Title Company ... on May 16, 1988 at 10:00 AM .... Time is of the essence of this contract." After forming the contract, the Bassos assigned their right to purchase Dierberg's property to Miceli and Slonim Development Corp. At 10:00 AM on May 16, 1988, Dierberg appeared at Community Title for closing. No representative of Miceli and Slonim was there, nor did anyone from Miceli and Slonim inform Dierberg that there would be any delay in the closing. At 10:20 AM,Dierberg declared the contract null and void because the closing did not take place as agreed, and she left the title company office shortly thereafter. Dierberg had intended to use the purchase money to close another contract to purchase real estate later in the day. At about 10:30 AM, a representative of Miceli and Slonim appeared at Community Title to begin the closing, but the representative did not have the funds for payment until 1 :30 PM. Dierberg refused to return to the title company, stating that Miceli and Slonim had breached the contract by failing to tender payment on time. She had already made alternative arrangements to finance her purchase of other real estate to meet her obligation under that contract. Miceli and Slonim sued Dierberg, claiming that the contract did not require closing exactly at 10:00 AM, but rather some time on the day of May 16.

a). Will they prevail?

b). why should late performance be considered a breach?

Answer 1

(a): In this case Miceli and Slonim will not prevail, Dierberg will prevail. This is because in the case there is the issue of specific performance. In a contract when a clause specifies that time is of essence it will effectively give rise to a specific contractual provision. In this case the specific contractual provision has fixed the time of the performance which was 10 AM on 16th May 1988. This will be regarded as the vital element of the contract.

(b): Here late performance will be considered a breach because time was of essence in this contract and there was no ambiguity in the contract with regards to time. The terms clearly state that the contract required closing at 10 AM. This means reasonably near 10 AM. As such Miceli and Slonim's failure to tender payment until May 16, 1988, at 1:30 PM will be regarded as a breach of contract in this case and this will be even more so considering the fact that they failed to inform Dierberg of the delay in closing.