Cengage Advantage Books: Law for Business 18th Edition by John Ashcroft ,Janet Ashcroft

Exercise 25

David Goodwin contracted to buy real property from Suzanne Orr and Nelson Bolstridge for $1,020,000. Goodwin paid a deposit of $25,000. Under "Liquidated Damages," the contract stated that if the buyer defaulted, "the amount of the deposit may, at the option of the Seller, become the property of the Seller as reasonable." Before the closing date, Goodwin notified Orr and Bolstridge that he could not sell his house and therefore could not buy the property. Orr and Bolstridge kept the $25,000, and the parties had no contact for more than a year. Orr and Bolstridge then sued Goodwin for various costs, alleging that although the damages would be difficult to ascertain, they were not bound by the liquidated damages clause. Were they?