Legal Blog

Time of Essence

AgriMarine v. Akvatech 2018 Ont SCJ

A letter agreement, with time of the essence, required the purchaser to pay $2.5 million to the vendor for the designated purpose of retiring all of the vendor’s debt to a particular creditor. The transaction did not close on the targeted closing date because the amount being paid was $100,000 short of the amount necessary to retire the debt. On closing, neither party regarded the other as having breached the contract and there was no acceptance of any breach. One month later, the purchaser purported to unilaterally set a new closing date at 4 days’ hence. The judge noted that there was no breach at the targeted closing date and that, accordingly, the agreement was not terminated, but time was no longer of the essence. The judge held that, when the purchaser attempted to set a new closing date (according to King v. Urban Transport Ont CA), it could not do so because it was still not in a position to close the transaction and, regardless, a closing date 4 days’ hence was not reasonable.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.