A buyer enters into a Residential Purchase Contract for a property in Red Deer. The contract specifies that if the buyer does not remove their financing condition by 5:00 PM on May 10, 2025, the seller has the right to terminate the contract. This clause specifically states, 'Time is of the essence regarding removal of this condition.' If the buyer informs the seller of funding approval at 5:30 PM on May 10, 2025, what is the legal implication?

Question: A buyer enters into a Residential Purchase Contract for a property in Red Deer. The contract specifies that if the buyer does not remove their financing condition by 5:00 PM on May 10, 2025, the seller has the right to terminate the contract. This clause specifically states, 'Time is of the essence regarding removal of this condition.' If the buyer informs the seller of funding approval at 5:30 PM on May 10, 2025, what is the legal implication?

Answer options:

• The contract is still binding, as the delay was minor.
• The seller is obligated to accept the late notification. ✅ The seller may choose to terminate the contract due to the breach of the 'time is of the essence' clause.
• The buyer can demand specific performance, as financing was secured.

Correct answer: The seller may choose to terminate the contract due to the breach of the 'time is of the essence' clause.

Explanation: When a contract states that 'time is of the essence,' it means that strict adherence to the specified deadlines is a fundamental term of the contract. Failure to meet such a deadline is considered a breach, allowing the non-breaching party (the seller, in this case) to terminate the contract, as per contract law principles related to time stipulations.