Breach & Remedies
~11 min read · Choose among specific performance, liquidated damages and rescission.
When a party won't perform, the law offers a menu: force the deal (specific performance), take the deposit (liquidated damages), sue for the loss (compensatory), or unwind everything (rescission). The exam matches remedy to breach — and reserves specific performance for land's uniqueness.
Breach and anticipatory repudiation
Breach is unexcused nonperformance of a contractual duty. Anticipatory repudiation: a party declares in advance they will not perform — the innocent party may treat the contract as breached immediately, sue, and mitigate, rather than waiting for the closing date to pass. Minor (immaterial) breaches yield damages but don't excuse the other side's performance; material breaches do.
- Material breach excuses counter-performance
- Repudiation = breach now, no need to wait
- Innocent parties still mitigate damages
The remedy menu
Specific performance: a court orders the breaching SELLER to convey — granted because land is unique and money can't replace a particular parcel (buyers rarely face it; money damages usually suffice against a buyer). Compensatory damages: the monetary loss from the breach (price differences, carrying costs). Liquidated damages: the pre-agreed sum — in purchase forms, the earnest money — accepted in place of proving actual loss; must be a reasonable pre-estimate, not a penalty. Rescission: unwind the contract, restore both sides to pre-contract positions (deposits returned) — the remedy for fraud, misrepresentation, and mutual mistake. Parties may also settle by mutual release or novation.
- Specific performance: land's uniqueness forces conveyance
- Liquidated damages: the deposit, as pre-agreed and reasonable
- Compensatory: prove the loss; rescission: unwind and restore
- Election matters: forms often force choosing deposit OR suit
Limits and practicalities
Liquidated-damages clauses that operate as penalties are unenforceable; many forms cap deposits retained (or require election between keeping the deposit and suing for more). The statute of limitations bounds when suits start; laches bars stale equitable claims. Brokers' commissions on a seller default are a separate fight — under many listings, a seller who refuses a ready-willing-able buyer still owes the fee.
Worked example
Two collapses: (A) a seller gets a better offer and refuses to close on a signed $500,000 contract with a buyer who has performed every step; (B) a buyer simply vanishes before closing on a $450,000 contract holding $15,000 earnest money, and the seller later resells for $440,000 after $6,000 of carrying costs. What remedy fits each?
(A) The buyer wants THIS house — and equity agrees: specific performance compels the seller to convey, because every parcel is unique and $500,000 in damages cannot buy an identical one; the buyer may alternatively take compensatory damages (say the market jumped $40,000), but the signature remedy against a breaching seller is the forced conveyance. (B) Against the vanished buyer, the seller's streamlined path is the liquidated damages clause: keep the $15,000 deposit and move on — conveniently close to the actual $10,000 price drop plus $6,000 carrying loss. If the form forces an election, keeping the deposit usually ends it; suing for actual damages instead means proving the resale mitigation. Buyer breach → money; seller breach → the house itself.
Common exam pitfalls
Ordering specific performance against buyers routinely.
It exists but is rare — money is usually adequate against a buyer; the doctrine's home is forcing SELLERS to convey unique land.
Enforcing a punitive 'liquidated damages' figure.
The amount must reasonably pre-estimate loss — penalties dressed as liquidated damages fail.
Waiting for the closing date after a repudiation.
Anticipatory repudiation is breach the day it's declared — act, mitigate, and sue from there.
Seller breaks: take the house. Buyer breaks: take the deposit. Lies were told: take it all back.
Recap
- Material breach excuses performance; repudiation is instant breach
- Specific performance: land is unique — forces the seller's conveyance
- Liquidated damages: the deposit as reasonable pre-estimate
- Compensatory damages require proof and mitigation
- Rescission unwinds fraud, misrepresentation, mutual mistake
- Penalty clauses and stale claims fail
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