Robert, a buyer in Brookline, Massachusetts, signs a purchase and sale agreement with a $20,000 deposit. The agreement does not contain a liquidated damages clause. Robert later defaults without legal justification. The seller re-lists the property and ultimately sells it for $25,000 less than the original contract price. Under Massachusetts law, what is the seller's most appropriate remedy?
Correct Answer
B) The seller may sue Robert for actual damages, which would include the $25,000 price difference and any carrying costs, but the deposit would be credited against the judgment.
When a Massachusetts purchase and sale agreement does not contain a liquidated damages clause, the seller's remedy for buyer default is actual damages. Actual damages include the difference between the contract price and the resale price ($25,000) plus additional carrying costs incurred while the property was re-listed. However, the deposit retained by the seller must be credited against any damages judgment — the seller cannot retain the deposit AND recover full actual damages without crediting the deposit amount.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
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