Citation. 22 Ill.546 A.2d 452 (Me. 1988)
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Brief Fact Summary.
Plaintiffs and Defendants, real estate sellers, entered into a contract in which Plaintiffs planned to buy a condo. As part of the contract, Plaintiffs agreed that Defendants would retain the 15% down payment if Plaintiffs breached the contract for sale. Plaintiffs did breach the contract for sale. Defendants were able to sell the condo for $15,000.00 dollars more than Plaintiff’s contract price.
Synopsis of Rule of Law.
Florida law allows for liquidated damages to be vacated if they “shock the conscious”. If a party is able to recoup some of his losses in ways other than by liquidated damages, it is not enough to “shock the conscious.”
Defendant is a real estate seller. Plaintiffs made a contract to buy a condominium from Defendants for $150,000.00. As part of the contract, Plaintiffs paid a 15% deposit. The liquidated damages clause allowed Defendant to keep the deposit if Plaintiffs breached the contract. Plaintiffs delayed closing several times. Finally, Defendant gave them a deadline to close or Defendants would keep the down payment and cancel the contract. Plaintiffs did not meet the deadline. Defendants canceled the contract, kept the down payment and sold the condominium for $165,000.00, a few days later.
Is the liquidated damages provision void for shocking the conscience of the court?
Liquidated damages, which allow parties to settle their disputes without going to court, should be encouraged.
Florida allows liquidated damage provisions to be declared if they “shock the conscious” of the court by conferring a greater than deserved benefit on the seller. In this case, Defendant was able to sell the condominium at a higher price. Defendants did not gain enough to “shock the conscious” of this court.
The court, emphasizing how liquidated damages should be encouraged to quickly settle contract disputes, sets a strict standard for determining that liquidated damages in this case are unconscionable.