Holiday Inns of America, Inc. v. Knight
Supreme Court of California
450 P.2d 42 (1969)
Knight (defendant) granted Holiday Inns' predecessor (plaintiff) a five-year option to purchase real property, requiring an initial $10,000 payment plus four additional $10,000 annual installments into escrow, with the contract providing the option would cancel if a payment wasn't made by July 1 each year; Holiday Inns made the first three payments on time, but its 1966 check arrived a day late (July 2), and Knight rejected it, declaring the option cancelled. Holiday Inns sued for a declaration that the contract remained in force after Knight also refused a follow-up payment.
Whether a court may decline to strictly enforce a contract's terms if the breaching party would suffer a disproportionate forfeiture as a result.