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Carnack contracts to sell his house and lot to Willard for $100,000. The terms of the contract call for Willard to pay 10 percent of the purchase price as a deposit toward the purchase price, or 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 of the contract terms entitle him to keep the deposit. Discuss who is correct.
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