In the high-stakes world of commercial real estate transactions, the phrase “time is of the essence” is more than boilerplate language—it’s a contractual cornerstone that can make or break a deal. The recent Ontario Superior Court decision in Goncalves v. 958041 Ontario Limited, 2025 ONSC 1813, offers transactional real estate lawyers a stark reminder of how strictly courts will enforce these provisions, even when parties continue to communicate after a deadline passes.
The Facts
This dispute arose from an Agreement of Purchase and Sale (APS) dated February 28, 2023, for an industrial property in Stoney Creek, Ontario, with a purchase price of $1,835,000. The seller agreed to provide vendor-take-back financing for 75% of the purchase price.
The APS contained buyer’s conditions that had to be satisfied or waived by a specific date (the “DDate”). Critically, the agreement included an “Automatic Termination Clause” stating that if the buyer failed to provide written notice waiving or satisfying the conditions by the DDate, the APS would automatically terminate and become null and void.
The parties amended the agreement twice, extending the DDate first to April 21, 2023, and then to May 5, 2023.
The Critical Timeline
On May 5, 2023, rather than waiving conditions, the buyer’s agent proposed a third amendment requiring environmental testing at the buyer’s expense and extending the closing date. Previously, the buyer had noticed containers with hazard symbols in a tenant-occupied space, raising concerns about the lack of fire, explosion and environmental protection, and forming the basis for the proposed third amendment.
The next day, however, the buyer sent a revised proposal shifting the costs of testing and remediation to the seller.
On May 19, 2023, the seller’s agent rejected the proposed amendments and instructed the buyer to “waive your condition and close.” The buyer responded on May 31, 2023, softening the terms slightly and threatening litigation if the seller wouldn’t agree. The seller’s agent said he would ask, but no further agreement was reached.
On June 29, 2023, the seller sent the buyer a mutual release. The seller then sent follow-up emails on July 18 and August 7, 2023, each time asserting that the deal had expired. The buyer never responded to any of these communications.
Finally, on August 14, 2023, the buyer’s litigation counsel sent a letter claiming the APS remained valid and that the buyer would now accept the property “as-is” and handle remediation at its own cost, demanding the seller complete the transaction. The seller refused, and litigation ensued.
The Court’s Decision
Justice Sheard granted summary judgment in favor of the seller, finding that the APS had automatically terminated on May 6, 2023, when the buyer failed to provide the required waiver by the DDate.
The buyer advanced several arguments that the APS remained enforceable:
- Waiver of “Time is of the Essence” Provision
The buyer argued that the seller’s May 19, 2023 email waived strict compliance with time limits. The court disagreed, finding that the email did not demonstrate the seller’s “unequivocal and conscious intention to abandon” its right to enforce the timeline.
Justice Sheard noted that the May 19 email specifically referenced the buyer’s obligation to waive conditions and could be viewed as the seller proposing its own amendment to extend the DDate to May 19, 2023. However, since this proposed amendment was never accepted by the buyer in writing, it could not amend the APS.
- Revival of the Contract
The buyer relied on Rabinowitz v. 2528061 Ontario Inc., 2024 ONSC 2357, where ongoing negotiations between parties revived an expired contract. Justice Sheard distinguished that case, finding that the May 19 and May 31, 2023 emails did not amount to genuine negotiations, as the seller’s position remained firm and unchanged, and the buyer’s softened proposal went unanswered.
- Cherry-Picking Contract Terms
The court rejected the buyer’s position that it could enforce favorable terms (purchase price and vendor-take-back mortgage) while ignoring unfavorable ones (due diligence deadlines and waiver requirements). This would violate principles of contract interpretation and commercial reasonableness.
Alternative Ground: Repudiation
The court also found, in the alternative, that a reasonable person would conclude the buyer no longer intended to be bound by the APS, constituting repudiation that the seller accepted. Key factors included the buyer’s failure to waive conditions, its insistence on amendments the seller rejected, and its silence from May 31 to August 14, 2023.
Practical Takeaways for Transactional Lawyers
- Draft Clear Automatic Termination Clauses
The court noted it was “undisputed that the Buyer never notified the Seller in writing that the conditions were waived or satisfied.” The automatic termination clause operated exactly as drafted, without requiring any action by the seller. When drafting for seller clients, ensure such clauses are clear and self-executing.
- Formalize All Amendments in Writing
The APS contained a “time is of the essence” clause stating that time limits “may be extended or abridged by an agreement in writing signed by Seller or Buyer.” The court emphasized that any amendment required “an agreement in writing, signed by the parties, just as the parties had done with the First Amendment and Second Amendment.” Mere proposed amendments, like the ones sent by the seller in this case, will not suffice.
- Avoid Ambiguous Extensions
The buyer pointed to the fact that the seller signed the First Amendment on April 28, 2023—seven days after the April 21, 2023 deadline—without declaring the APS terminated. While the court found this did not constitute waiver, it created an argument that required adjudication. Sellers should promptly declare termination if they intend to rely on it, or formally extend deadlines in writing if they wish to preserve the deal.
- Continued Communication Does Not Constitute a Waiver
The most dangerous misconception revealed by this case is that continued discussions after a deadline passes somehow keeps a deal alive. The court found no waiver despite the seller’s May 19, 2023 email inviting the buyer to waive conditions and close. The court also found that the seller’s subsequent emails, wherein it expressed its reliance on the timelines in the APS and the operation of the automatic termination clause, reinforce the conclusion that the seller did not intend to abandon its rights.
- “As-Is” Offers May Come Too Late
The buyer’s August 14, 2023 offer to accept the property “as-is” and complete the APS came more than three months after the twice-extended DDate. By that point, the buyer could not unilaterally revive the deal by abandoning conditions it had previously insisted upon. Once an automatic termination clause operates, the agreement is dead. Revival of that agreement requires mutual consent.
Conclusion
Goncalves serves as a cautionary tale for both buyers and sellers in commercial real estate transactions. For buyers, the lesson is clear: if you want to preserve your contractual rights, comply with deadlines or formalize extensions in writing before they expire. For sellers, the case confirms that properly drafted automatic termination clauses will be strictly enforced, even when you continue to communicate with the buyer after the deadline passes.
Transactional real estate lawyers should review their standard form agreements to ensure time-sensitive provisions are clearly drafted and explained to clients. When time truly is of the essence, there is no room for informal accommodations or assumptions—only signed amendments will suffice.
