Lynch v. Andrew
Appeals Court of Massachusetts
481 N.E.2d 1383 (1985)
Lynch (plaintiff) contracted to buy Andrew's (defendant) home, with a deposit-return clause conditioned on being unable to obtain a mortgage by a set deadline; when a bank balked at Lynch's undersized loan request (planning to cover the gap with proceeds from selling his own not-yet-listed home) and offered a bridge loan only if Lynch mortgaged both his current and vacation homes, Lynch refused and missed the deadline. Andrew, forced to later sell her home for less and buy a lesser-valued replacement, kept Lynch's $25,400 deposit; the trial judge instead awarded her only $8,400 in proven actual damages, and Lynch appealed.
Whether a real estate sales contract may contain a liquidated damages provision if the damages are a reasonable estimate of the damages that may occur upon breach.