A seller in New Orleans enters into a purchase agreement with a buyer for $420,000. The contract does not contain a liquidated damages clause. The buyer defaults without legal justification, and the seller is forced to relist and ultimately sells the property to a different buyer for $395,000 three months later. Under Louisiana Civil Code, what damages may the seller recover from the defaulting buyer?
Correct Answer
B) The difference between the contract price and the resale price, plus any additional proven losses caused by the breach
Under Louisiana Civil Code Art. 1994, a party who fails to perform an obligation is liable for damages caused by the failure. When there is no liquidated damages clause, the seller is entitled to actual damages — which include the difference between the original contract price ($420,000) and the resale price ($395,000), which is $25,000, plus any additional costs caused by the breach (such as carrying costs, additional marketing expenses, or other proven losses during the three-month period). Louisiana Civil Code Art. 2002 also requires the aggrieved party to mitigate damages, which the seller did by reselling.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Offer and acceptance is the process by which one party proposes specific terms for a contract and the other party agrees to those exact terms, creating mutual assent. This mutual agreement, also called a meeting of the minds, is an essential element of every valid contract.
An option contract gives one party the exclusive right, but not the obligation, to purchase or lease a property at a specified price within a specified time period. The buyer pays option consideration to keep the option open.
A purchase agreement is a legally binding contract between a buyer and seller that outlines the terms and conditions for the sale of real property. It is also commonly called a sales contract, purchase and sale agreement, or earnest money agreement.
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