Saturday, January 4, 2014

Colonial at Lynnfield, Inc. v. Sloan case brief

Colonial at Lynnfield, Inc. v. Sloan case brief summary
870 F.2d 761 (1989)

CASE SYNOPSIS
Defendant prospective buyer sought review of the decision of the United States District Court for the District of Massachusetts, which held that defendant had breached a contract for the sale of an interest in a hotel and concluded that plaintiff seller was entitled to liquidated damages under the contract.

CASE FACTS
Plaintiff seller and defendant prospective buyer entered into a contract for the sale of an interest in a hotel. The contract provided for liquidated damages in the event that defendant breached the agreement. Although the contract provided a deadline by which the sale was to take place, defendant requested an extension which plaintiff granted. Defendant subsequently failed to purchase the hotel and plaintiff later sold the interest to another buyer, at a higher price. Plaintiff filed suit alleging that defendant breached the contract and that it was entitled liquidated damages. Defendant sought review of the trial court's decision which held that defendant had violated the terms of the agreement and awarded plaintiff liquidated damages.

DISCUSSION

  • The court affirmed the trial court's conclusion that defendant had breached the agreement, which was revived by defendant's request for an extension, but reversed the award of liquidated damages. 
  • Although the court concluded that the liquidated damages clause was reasonable at the time the contract was signed, liquidated damages could not be awarded to plaintiff because it was easily ascertainable that plaintiff had not suffered any actual damages.

CONCLUSION
The court affirmed the trial court's decision finding defendant prospective buyer breached the contract but reversed the award of liquidated damages. The court held that the liquidated damages could not be awarded because it was easy to ascertain that plaintiff seller had suffered no actual damages as a result of the breach.

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