Basic Obligations of the Buyer and Seller

Question 1

Are stipulations as to time of payment a condition of a contract?

Answer 1

No, under section 11 of the SGA, unless otherwise stated stipulations are not of the essence of a contract. (People are always late paying, so this would inevitably lead to too many broken deals, thereby flooding courts.)

Question 2

Hartley v Hymans

Answer 2

Delivery & Payment (Time of the Essence)

1. RULE: Whether time is of the essence depends on the terms of the contract (no presumption), but in commercial transactions this is frequently the case even if not strictly stated.
2. FACTS: D agrees to buy yarn to be delivered in September, but it is not.
3. HOLDING: Section 11 aside If the stipulation that “time is of the essence” has been waived, parties are estopped from relying it. If time is of the essence, a vendor who has failed to deliver cannot call upon the buyer to accept delivery after the period.

Question 3

What if the contract is silent on whether time is of the essence?

Answer 3

Where silent, goods must be delivered within a reasonable time (Allen v Danforth)

Question 4

Allen v Danforth

Answer 4

Delivery & Payment (Time of the Essence)

1. RULE: Where no delivery date is specified, the goods must be delivered within a reasonable time (question of fact to be determined by judge).
2. FACTS: P entered into a contract for a car and paid the full price in advance although no date was specified in the contract. Date was verbally agreed upon but not followed.
3. REASON: Court did not allow this because it was agreed upon orally – although today you can agree orally.
4. HELD: Held that time was not of the essence not because it was agreed to orally, but because of the new legislation this would be decided differently.

Question 5

What if a party has waived time of the essence but changes their mind?

Answer 5

Time can be of the essence after it is waived if reasonable notice given (Chas Richards v Oppenheim)

Question 6

Chas Rickards v Oppenheim

Answer 6

Delivery & Payment (Time of the Essence)

1. RULE: Time can be of the essence after the initial stipulation is waived so long as reasonable notice is given.
2. FACTS: D ordered a Rolls Royce and requested a body be built on it. It was late, and D said if it was not ready by July 25 he would not accept, and it did not get there until October.
3. REASON: There was an original stipulation that time is of the essence and this was waived – but D gave notice saying that if not delivered by July 25, he would refuse. Factors: time required to finish the job, has the party been pressing for delivery, have they given prior notice, is it especially important that delivery occur before the date, was original date of the essence.
4. HELD: Delivery by July 25 was of the essence.

Question 7

What must a buyer do if they wish to repudiate?

Answer 7

The buyer must set a final delivery date if they wish to repudiate (Sunstrum v International Building)

Question 8

Sunstrum v International Building

Answer 8

Delivery & Payment (Time of the Essence)

1. RULE: A buyer must set a final delivery date if they want to be able to repudiate and not have to accept something delivered well beyond the date.
2. FACTS: P contacted D for steel building. Building was not delivered on time and P said he would still accept by end of June. In mid-July, still no building, so P entered into a new contract and rejected the buidling.
3. REASON: Time is of the essence when there is an express stipulation in the contract that the time fixed must be complied with or where circumstances of the contract indicate it must be complied with. It was essential here b/c it was a mercantile contract with a fixed time and failure to deliver would be a breach. P, by his conduct, led D to believe that he would not insist on stipulation b/c he waited 3 months to tell him. Deposit was made in earnest to show that P was serious, and D is entitled to repudiate the contract and retain it.
4. HELD: Time was not of the essence, P cannot repudiate. D keeps deposit.