Contracts
A Connecticut purchase and sale agreement states that 'time is of the essence.' The closing date is June 15th. The buyer cannot close until June 20th. What is the legal consequence?
AThe contract automatically extends to June 20th
BThe seller may declare the buyer in default and retain the earnest money or sue for damages✓ Correct
CThe buyer must pay a $500 per day penalty
DThe seller must agree to the extension or waive the time-is-of-the-essence clause
Explanation
When a contract includes a 'time is of the essence' clause, the specified dates are binding. If the buyer fails to close by June 15th without an agreed extension, the seller may declare a breach, retain the earnest money, or pursue other legal remedies.
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