Brief Fact Summary. The defendants, Duncan and Gertrude Pirnie contract for the sale of the Kutzins' house for $365,000. The contract did not provide for liquidated damages or forfeiture clause regarding the deposit.
Synopsis of Rule of Law. In order to prevent unjust enrichment, a seller may retain a deposit when a buyer breaches a contract even if the contract does not contain a liquidated-damages or forfeiture clause.
Where the terms of a contract are clear and unambiguous there is no room for interpretation or construction and the courts must enforce those terms as written.View Full Point of Law
Issue. Whether a seller should be entitled to retain a deposit when a buyer breaches a contract that does not contain a liquidated-damages or forfeiture clause.
Held. Judgment affirmed. The trial court held that the Kitzins' cannot retain the entire deposit as damages. In order to prevent unjust enrichment the restitution costs must be offset by the deposit LESS the amount of the injury caused by the breaching parties actions. The judgment of the Appellate Division is modified to reinstate the trial court's damage award.
Discussion. The Pirnies are entitled to restitution of their deposit less the amount of the injury to the Kutzins caused by the Pirnies' breach. To allow retention of the entire deposit would unjustly enrich the Kutzins and would penalize the Pirnies contrary to the policy behind the laws of contracts.