Adams signed a contract in which he promised to sell his house to Jefferson for $225 000.The "deposit" to be paid was set at $4000,and the liquidated damages clause provided that the deposit would be forfeited in the event that the buyer breached the contract.The buyer did breach the contract.Because the cost of housing was falling,it was difficult,even after a reasonable time had passed,to find a new buyer.The highest offer was $218 000.Adams accepted.Which of the following is true with regard to Adams's remedies?
A) He would be entitled to damages for money lost-$7000 plus selling costs.
B) He would be entitled to the $4000 only, if the court held that the deposit was an honest attempt of the parties to estimate damages.
C) He could sue for an injunction to stop him from buying another house.
D) He could ask the court to order an accounting.
E) Adams must sue for specific performance, which is the only remedy, an equitable remedy, available to the parties in land transactions.

Question

Quizplus · Accepted Answer

In this scenario, the liquidated damages clause was included in the contract, and the buyer breached the contract. The clause stipulates that the deposit of $4000 must be forfeited in the event of a breach. The court may hold the deposit as an honest estimate of damages, and therefore, Adams would be entitled to the $4000 only. Option A is incorrect because Adams cannot claim damages for money lost as the buyer did not purchase the house. Option C is incorrect because Adams has already accepted the buyer's offer, so he cannot sue for an injunction to stop him from purchasing another house. Option D is incorrect because there is no reason for the court to order an accounting. Option E is incorrect because Adams has already accepted the highest offer, so he cannot sue for specific performance.

Adams Signed a Contract in Which He Promised to Sell