17d • Bar Tested
MBE practice
Brown entered into a contract to purchase a condominium from Smith for $150,000 and paid Smith $15,000 as a down payment. The contract expressly provided that if Brown breached the contract, Smith would retain the $15,000 down payment as payment for the damages occasioned by Brown’s breach. Before the closing date, Brown decided not to purchase the condominium and instead purchased a different condominium. Smith refused to return the down payment. In an action by Brown to recover the down payment, which of the following are true?
A. Brown will not be entitled to restitution of the down payment because a breaching party cannot maintain an action for restitution
B. Brown will not be entitled to restitution of the down payment because Brown willfully breached the contract.
C. Brown will not be entitled to restitution of the down payment since the express terms of the contract stipulated that Smith would retain the $15,000 down payment as liquidated damages occasioned by Brown’s breach
D. Brown will be entitled to restitution of the down payment because down payment forfeiture clauses are per se illegal penalty clauses.
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MBE practice
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