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MGD Holdings JK, LLC v. Griswold

A-1079-02T5 (N.J. Super. App. Div. 2004) (Unpublished)

CONTRACTS; TIME OF THE ESSENCE—Where a contract requires amendments to be in writing, an oral agreement to extend a time of the essence closing is ineffective.

A contract for the purchase of vacant land called for a closing within one year, conditioned upon the buyer obtaining various governmental land use approvals for commercial development. The buyer could obtain two six-month extensions by giving the seller ten days’ written notice before certain dates in the contract. Time was of the essence, and if written notice was not given to the seller before each given date, the contract would be deemed canceled.

Prior to the expiration of the contract, the buyer sought to exercise its right to the two extensions. However, the buyer’s attorney never prepared the necessary written amendment. Therefore the seller deemed the contract to be cancelled, and contracted to sell the property to another buyer for a substantially higher price.

The buyer argued that the seller waived any “time of the essence” aspect of the closing date because it orally agreed to the extension. The Court disagreed, holding that although an oral extension agreement does not necessarily violate the statute of frauds, in this case the original written agreement explicitly provided that any amendment must be in a writing signed by both parties. Therefore, the oral amendment was ineffective. The Court added that even though it understood the buyer’s situation, having received some assurance prior to the expiration of the deadline that an agreement to extend the contract was in the works, the buyer still proceeded at its own risk when it allowed the deadline to pass. Any such assurance was outweighed by the strict terms of the parties’ written agreement.

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