A Massachusetts purchase and sale agreement for a property in Medford contains a clause stating: 'In the event of buyer's default, seller shall retain the deposit as liquidated damages, and this shall be the seller's sole and exclusive remedy.' The deposit is $40,000. After the buyer defaults, the seller sues for specific performance instead of retaining the deposit. Under Massachusetts law, what is the most likely outcome?
Correct Answer
D) The seller is bound by the exclusive remedy clause and cannot seek specific performance; the seller's remedy is limited to retaining the $40,000 deposit as liquidated damages.
Under Massachusetts law, when a purchase and sale agreement expressly states that the seller's sole and exclusive remedy for buyer default is retention of the deposit as liquidated damages, the seller is contractually bound by that limitation. The 'sole and exclusive remedy' language prevents the seller from pursuing alternative remedies such as specific performance or additional damages. Massachusetts courts enforce clear contractual limitations on remedies when they represent the parties' freely negotiated agreement. The seller cannot circumvent the agreed-upon exclusive remedy clause.
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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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