Answer to ‘You Be The Judge’: Time of the Essence Closing Date
Friday, May 30, 2008
The buyer wins. See the You Be The Judge post, click here.
Form the Court of Appeals of New York in ADC Orange Inc. v. Coyote Acres, Inc:
The question whether ADC’s late installment payment constitutes a material breach depends on whether time was of the essence with respect to that payment. Unless it was, ADC had a reasonable time in which to tender performance after the specified date of December 31, 2001 (see Grace v Nappa, 46 NY2d 560, 565 [1979]).
Grace stands for the proposition that in contracts of this kind, time is not ordinarily of the essence unless the agreement so provides (see also Brum Realty v Takeda, 205 AD2d 365 [1st Dept 1994]; Savitsky v Sukenik, 240 AD2d 557 [2d Dept 1997]). Here, the contract obligated ADC to pay $250,000 “in no event later than December 31, 2001.” That language alone does not make time of the essence. As we have long held, “the mere designation of a particular date upon which a thing is to be done does not result in making that date the essence of the contract” (Ballen v Potter, 251 NY 224, 228 [1929]).
We agree with Whitney v Perry (208 AD2d 1025 [3d Dept 1994]), in which the Appellate Division held that the very same phrase “in no event later than” is not sufficient to make time of the essence in connection with a closing date (see also Exclusive Envelope Corp. v Tal-Spons Corp., 187 AD2d 556, 557 [2d Dept 1992]; Lightle v Becker, 18 AD3d 449, 450 [2d Dept 2005]). (emphasis added)
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