Time is of the Essence in Offers and Hockey Explained
For whatever reason, many real estate agents seem to think that there’s some flexibility and a little “give and take” when Courts interpret the intentions of the parties in the application of the “time is of the essence” provisions. No, they won’t. Time is of the essence, so that means that the time is the time and no other time is the time. The actual “time” stated in the document is applied.
Consider an Offer with an irrevocable stated to be 8:00 pm. The Buyer’s Agent delivers the Offer to the Seller’s Agent and the Offer must be accepted, which means both signed and communicated to the Buyer’s Agent by 8:00 pm, or at 8:00 pm, but certainly no later than 8:00 pm, because that would be too late and the Offer would have expired. There would be nothing to accept.
This is Canada, so, let’s talk about hockey. A game is one hour in length, broken down into three 20 minute periods. Time is of the essence in the game. Assume a player takes a shot on goal at 19:59 of the second period and it goes in the net. It counts as a goal. Now, assume that the play was intense, the same player took a shot which went into the net at 20:01. It doesn’t count. It’s too late! I know that it was only late by a second, but, that’s the game. Time is of the essence. When the second period ended, it was just too late to score a goal. And, it doesn’t matter whether or not the buzzer went off. Maybe the buzzer was broken. The decision of the Referee will be guided by the time. Once, we hit the 20.00 minute mark, the period was over. That’s the rule.
We could have a different rule. Consider football. It’s divided into four 15 minute quarters. A field goal near the end of a quarter counts, as long as the ball was put into play by the 15:00 minute mark. It might go through the uprights until two seconds later, but that’s OK because time was NOT of the essence. In fact, it might have cleared three or four seconds later, and that’s still OK.
Let’s go back to contracts. The 8:00 pm irrevocable for an Offer is precisely that: 8:00 pm. It is just like the end of a period in hockey. It’s not quite the same as the end of a quarter in football or basketball where the shot will count after the buzzer.
Now, what about backdating? You are the Listing Agent and you look at your watch and see that it is 8:05 pm and you wanted to accept the Offer. You have two choices:
1) Ask for a new Offer from the Buyer, or
2) Signback a Counter-Offer with a new time limit.
Quite clearly, you cannot proceed to sign the existing document, mark the time at 19:55 pm and then send it back at 8:06 pm. That second step of sending it back would have been the actual time of acceptance, but, just like hockey, the game ended at 8:00 pm.
To mark it at 19:55 pm would be fraudulent. There was actually no contract. The deal was scheduled for completion three months out. The market either rises significantly or drops significantly over that three month period and one of the two parties wants out. But, out of what? There was no contract. The buzzer went off at 8:00 pm.
So, just remember, Offers are just like playing hockey.
Brian Madigan LL.B., Broker