Real Estate Articles
Second District Holds that "Time is of the Essence Really Means that Time is of the Essence"
The Second District Court of Appeals affirmed the trial court's decision that held when a payment that was due 45 days after execution of the contract that payment had to be made regardless of the fact that the 45th day landed on a Saturday. In Metro Development Group, L.L.C. v. 3D-C & C, Inc.,S. Morris Keithendale, Inc. and S. Morris Swope, 31 Fla. L. Weekly D2066a, an option contract was executed on August 18, 2004. The option contract provided that on the 45th day after the effective date of the contract, Metro had to either terminate the contract or, if Metro chose not to terminate the contract, it was required to make an additional deposit and an extension payment. The contract required the additional deposit and extension payment to be made on or before the 45th day after the effective date. This particular provision simply stated that payment had to be made "on or before the 45th day" and made no reference to "business days". The contract also contained a provision that stated "time is of the essence of this agreement." As luck would have it, the 45th day fell on Saturday, October 2, 2004. Metro paid part of the deposit on Friday, October 1, 2004, and attempted to pay the extension payment on Monday, October 4, 2004. The extension payment was rejected by the defendant.
In granting summary judgment for the defendants, the trial court held that the contract was clear on its face and no ambiguity existed. Payment was due on the 45th day and was not timely made. Metro appealed the trial court's decision to the Second District. Metro argued that the custom and usage in the real estate industry was that if a deadline fell on a weekend or holiday that such deadline would be, as a matter of practice, extended to the next business day. The trial court and Second District refused to accept this argument because of the clear language of the contract. Moreover, the Second District highlighted the fact that the contract had a "time is of the essence" provision. The Second District reasoned that if the parties intended to provide a grace period for payment of deposits they would not have had a time is of the essence provision.
This case illustrates the need for strict compliance of contractual provisions. A party should never assume that the other contracting party or a judge will provide any leniency with regard to a provision, even if it seems reasonable at the time. Furthermore, this case also illustrates the need to carefully draft and review contracts prior to execution. Obviously this problem could have been easily avoided by adding the following provision to the contract: "Time is of the essence in the performance of this Agreement; provided, however, if the last day for the performance of any obligation or the giving or receipt of any notice is a Saturday, Sunday or legal holiday in the State of Florida, then the last day for performance of the obligation or the giving or receipt of notice shall be the next business day."