Is Ingram entitled to Watson’s $15,000 earnest money as liquidated damages? Explain.
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Watson agreed to buy Ingram’s house for $355,000. The contract provided that Watson deposit $15,000 as earnest money and that “in the event of default by the Buyer, earnest money shall be forfeited to Seller as liquidated damages, unless Seller elects to seek actual damages or specific performance.” Because Watson did not timely comply with all of the terms of the contract, nine months after the Watson sale was to occur, Ingram sold the house to a third party for $355,000. Is Ingram entitled to Watson’s $15,000 earnest money as liquidated damages? Explain. |
Explanation
It is found that the claim amount is non-refundable if Person W has failed to complete the purchase and the set amount is $15,000, which may be a logical forecast by Person I and Person W for the implications.
The section for dissolved damages may be endorsed if the amount fixed is a sensible prediction of just reimbursement for the impairment, which may be caused due to the violation. In this case, Person I has the right over the earnest money of Person W.
Verified Answer
In this case, Person I may be authorized to Person W's earnest amount. The trial court found that the earnest amount may be distinctly planned by both parties to be non-recoverable under the specific condition.
