Contracts
What is the legal effect of a 'time is of the essence' clause in a California real estate contract?
AIt allows either party to extend deadlines without penalty
BIt makes all specified deadlines strict and material; failure to perform on time is a breach✓ Correct
CIt only affects the closing date, not contingency periods
DIt requires all parties to waive contingencies
Explanation
A 'time is of the essence' clause makes contractual deadlines strictly enforceable. Missing a deadline is considered a material breach, which can give the non-breaching party the right to cancel the contract and seek damages.
Related California Contracts Questions
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