Carnack contracts to sell his house and lot to Willard for $100,000. The terms of the contract call for Willard to pay 10% of the purchase price as a deposit toward the purchase price as a down payment. The terms further stipulate that should the buyer breach the contract, Carnack will retain the deposit as liquidated damages. Willard pays the deposit, but because her expected financing of the $90,000 balance falls through, she breaches the contract. Two weeks later, Carnack sells the house and lot to Balkova for $105,000. Willard demands her $10,000 back, but Carnack refuses, claiming that Willard's breach and the contract terms entitle him to keep the deposit. Discuss who is correct.
Justify your answer using information from your Reading:
- Discuss the elements of liquidated damages.
- Analyze what distinguishes liquidated damages from punitive damages and discuss whether or not the penalty be assessed in the above case.
- Suppose Carnack was able to determine at the time the Contract was signed the amount and type of his damages. Would your answer change?
John advertised a rare guitar for sale on a public web site, listing the price as $700.
Mike, a potential buyer, contacted John via e-mail and they discussed the guitar's condition, price, and history for several days. In their most recent e-mail exchange, John insisted that Mike agree to buy the guitar. He told Mike that there were other potential buyers and that John could not wait any longer to sell. Mike responded, "Consider it done." Based upon Mike's response, John informed all other interested buyers that the guitar had been sold.
When John e-mailed Mike and asked when he would pay for and pick up the guitar, Mike told John that he did not want the guitar and besides, Mike had not signed or agreed to anything. Is Mike obligated to pay for the guitar?
Research this issue and then be sure to:
- Discuss the UETA provisions concerning the meaning of records and signatures.
- Discuss whether the above facts place this issue within the jurisdiction of the UETA.