Earlier, I wrote about the Van Damme v. Gelber case decided on July 27, 2009. One of the interesting aspects of the case is that the issue of timing arose. The seller insisted that the money for the painting had to be received by a particular date. Because of a bank mistake, the money arrived after the date specified. One’s initial reaction may be that this is a breach of contract; however,whether a missed deadline in a contract amounts to a breach will depend upon whether time is “of the essence.” If time is not of the essence, then the court will not consider the missed deadline a breach.
The easiest way to make time of the essence in a contract is to use the phrase “time is of the essence.” In the absence of such language, however, the court may look to other factors or apply a bright line rule. For instance, when seeking specific performance, (an action in equity) the default rule is that time is not of the essence unless the parties state otherwise. 1776 Associates Corp. v. Broadway West 57th Street Assoc., 585 N.Y.S.2d 316 (1st Dep’t 1982). When seeking damages, the rule is reversed: the court will presume the parties agreed that time was of the essence. The court may also look to the terms of the contract to determine whether the parties wanted to make timing an express condition; that is, did the parties really intend to make timing a central condition of the contract, or did they merel append a time to one of the conditions to be performed, such as payment?
In this case the court held that time was not of the essence, and the buyer’s failure to deliver the money to the seller in time did not affect their contract:
Gelber [the seller] also contends that he need not deliver the Painting (or pay damages) because the purchase price had not arrived on or before February 7, 2007. As discussed above, that argument lacks merit because the parties had not made time of the essence, and, therefore, Van Damme [the buyer] had a reasonable time within which to perform (see e.g. ADC Orange, Inc. v. Coyote Acres, Inc., 7 NY3d 484,supra), which he did. That the parties did not intend to make time of the essence as to payment is also indicated by the language in the Contract that: “Title to the Work will not pass to Purchaser until Seller and/or Seller’s Agent has received and collected payment of the Purchase Price in full.” The use of the word “until” indicates that the only express condition was payment of the purchase price in full (see MHR Capital Partners Presstek, Inc ., — NY3d —-, 2009 N.Y. Slip Op 05200 [2009] [use of terms such as “if,” “unless,” and “until” constitute unmistak- able language of condition] ).
The Sale of a Painting Gone Wrong Pt. 2
Earlier, I wrote about the Van Damme v. Gelber case decided on July 27, 2009. One of the interesting aspects of the case is that the issue of timing arose. The seller insisted that the money for the painting had to be received by a particular date. Because of a bank mistake, the money arrived after the date specified. One’s initial reaction may be that this is a breach of contract; however,whether a missed deadline in a contract amounts to a breach will depend upon whether time is “of the essence.” If time is not of the essence, then the court will not consider the missed deadline a breach.
The easiest way to make time of the essence in a contract is to use the phrase “time is of the essence.” In the absence of such language, however, the court may look to other factors or apply a bright line rule. For instance, when seeking specific performance, (an action in equity) the default rule is that time is not of the essence unless the parties state otherwise. 1776 Associates Corp. v. Broadway West 57th Street Assoc., 585 N.Y.S.2d 316 (1st Dep’t 1982). When seeking damages, the rule is reversed: the court will presume the parties agreed that time was of the essence. The court may also look to the terms of the contract to determine whether the parties wanted to make timing an express condition; that is, did the parties really intend to make timing a central condition of the contract, or did they merel append a time to one of the conditions to be performed, such as payment?
In this case the court held that time was not of the essence, and the buyer’s failure to deliver the money to the seller in time did not affect their contract:
The opinion is here.