Is Timing of the Essence? High Court Rules on Ferrari Sale Dispute
Contracts for the sale of goods almost always stipulate a date by which payment must be made. However, as a High Court ruling concerning the sale of a classic Ferrari racing car made plain, it does not necessarily follow that the timing of payment is of the essence.
A classic car dealership contracted to buy the car from an overseas seller for over three million euros. Following payment of a deposit, the contract required it to pay the balance of the purchase price within five business days. It also provided that, if the dealership did not meet its payment obligations, the seller was entitled to withdraw from the sale.
The dates on which payment was made and received were in dispute, but the seller asserted that the deadline had in any event been missed and that the timing of the payment was of the essence. The delay in payment, he contended, amounted to a repudiatory breach, thus entitling him to terminate the contract.
For its part, the dealership argued that, regardless of the deadline, it obtained good title to the car when it paid the purchase price. It launched proceedings with a view to enforcing the contract and sought summary judgment against the seller on the basis that he had no viable defence to the claim.
Ruling on the matter, the Court found that, on a true reading of the contract, it did not purport to make the timing of the payment of the essence. It drew a clear distinction between making timing of the essence and giving the seller a contractual right of withdrawal in certain circumstances.
The subject matter of the contract was not highly time-sensitive. There was nothing to indicate that the case should be treated as an exception to the general position that, in a mercantile or commercial contract, the timing of a payment will not be deemed to be of the essence. By his conduct, the seller had in any event elected to waive any right he might have had to terminate the contract.
The Court ruled that, as currently pleaded, the seller's defence to the claim stood no real prospect of success. It refrained from awarding immediate summary judgment to the dealership, however, so as to give the seller an opportunity to seek permission to amend his defence in the light of the Court's decision.