Essay Question
Solution
The Facts
The facts of the case clearly suggest that either Braden did not made even a slightest of endeavor to find out the real issues or he was being totally misled by Susan vis-à-vis the property. Moreover, he had paid the 50% of the deposit before coming to know about the truth. However, the contract does not contain a liquidated damages clause.
Basis for getting out of contract
As we know that a recorded lien is the one in which the property serves as collateral for debt because the lien holder has the legal rights to go to the court in order to sell the property and satisfy the debt if it has not been paid. Moreover, the liens transfer with the property, so, in the event of them being not paid when the real estate is sold, the new owner becomes liable for the debts.
In light of the three important revelations regarding the property, if Braden wants to come out of the contract, then he doesn’t need to worry that much even though he is a signatory of the contract, because courts do not usually uphold the contracts that are grossly unfair to one party. In that case, the agreement is called unconscionable (Michelman, 1967). Moreover, it is very important to understand that contracts must contain mutual promises, obligations and trust between the parties who are involved in it. These three findings are so conspicuous that a case of fraud can easily be enforced on the part of Braden because presumably he was not given any opportunity to validate each and every aspect of the property. It appears that he was made to pay 50% of the deposit as soon as possible. However, the value of the property had decreased from 780,000 to 760,000 by the time he realized that he was misled. Also, the fact that did not know the property was accessible through a gravel road owned by Susan’s neighbor indicate that Braden was grossly misled by Susan, otherwise he would not have signed the contract in the first place.
In view of these findings, he has an option of exploring the possibilities of preparing solid grounds with which he can pursue a case of fraud against Susan. Whatever he was hopeful of doing with the property, he cannot do that whatsoever.
Also, we know that the contract is missing liquidated damages clause but as a matter of fact, the liquidated damages clause is subject to the rule against the penalties. So, it will apply regardless of whether the contract was negotiated by the parties. Recently, the courts have changed their approach in relation to liquidated damages and the laws of penalties. Recent case law indicates that providing there was a commercial justification for the liquidated damages clause and the clause does not act as a deterrent to prevent a party from breaching the contract, a liquidated damages clause which does not represent a genuine pre-estimate of the loss suffered may still be enforced ("When does an agreed liquidated damages clause go too far and become a penalty? - Legal Updates", 2015).
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Michelman, F. (1967). Property, Utility, and Fairness: Comments on the Ethical Foundations of "Just Compensation" Law. Harvard Law Review, 80(6), 1165. http://dx.doi.org/10.2307/1339276
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When does an agreed liquidated damages clause go too far and become a penalty? - Legal Updates. (2015). Clarkslegal.com. Retrieved 6 May 2016, from http://www.clarkslegal.com/Legal_Updates/Read/When_does_an_agreed_liquidated_damages_clause_go_too_far_and_become_a_penalty_