P17-Breach and Remedies

                        
Objective Form:

17.1  A party to this agreement shall be in breach in the event
that:
         (a)  any of its representations are untrue or warranties
              breached as of closing:
         (b)  it fails to timely perform any of its obligations
              or duties required hereunder;
         (c)  it fails to timely close the sale or purchase of
              the premises, except where such failure to timely
              close is specifically excused under the terms here-
              of or the other party is in breach.
         (d)  Time is of the essence in this agreement.

17.2  Unless a specific remedy is otherwise prescribed in this
agreement, in the event of breach by Seller, Buyer shall be
entitled to the following remedies:



         (a)  cancellation of this agreement and return of its
              deposit or any amounts paid to Seller hereunder;
         (b)  specific performance of the terms of this agreement
              by Seller.

17.3  Unless specified remedy is otherwise prescribed in this
agreement, in the event of default by Buyer, Seller shall be
entitled to the following remedies:
         (a)  cancellation of this agreement in which event
              Seller may retain all sums deposited or paid by
              Buyer as liquidated damages;
         (b)  specific performance of the terms of this agree-
              ment by Buyer.
         It is acknowledged by the parties that the sums retained
by Seller are liquidated damages and not a penalty, being
reasonable compensation for the damages incurred by Seller in
view of the difficulty or impossibility of predetermining or
ascertaining the actual amount of such damages.




17.4  The parties agree that, in the event of a breach of this
agreement as determined by a court of competent jurisdiction, the
party in breach shall pay all costs incurred by the other in
enforcing the remedies afforded herein, including, but not
limited to, court costs and reasonable attorneys' fees.

Comments
    The objective form predetermines the extent of damages in the
event of breach as opposed to merely allowing the parties
unqualified redress through the courts.  The parties may either
seek specific performance of the contract or be satisfied with
the amount of the deposit as damages.  No consequential damages
are allowed beyond the deposit other than costs of collection
which are recoverable only when there is a judicial determination
of breach.  The provision does not, however, determine the amount
of damages or form of redress for a breach of provisions of the
agreement which formally address the issue of damages (i.e. the
indemnity provision in the inspection provision).




Alternatives
    The optimum position of one seeking redress for an alleged
breach is to have the right not only to keep (or have returned)
the deposit but also to receive consequential damages for all
losses which are the proximate or direct result of the breach.  A
seller may have passed up a sale to another party (lost
opportunity) or may wind up selling the property for less than
the price for which the Buyer had contracted.  The Seller may
have lost interest on the money which it would have received on
the sale between the date of breach and resale.  Where the Seller
breaches, the Buyer may be unable to purchase another property
which is as well suited for its purposesY at the same price.
Often, these types of damages are both difficult to prove
(particularly lost opportunity) and, in some states, not legally
recoverable under judicial precedent.  Rather than attempting to
specifically label the amount or method of computing such damages
the agreement simply provides that the parties may seek such
redress as the law would allow.
         "In the event of breach by either party, the other party
         shall be entitled to (i) specific performance; (ii) return
         of the deposit or earnest money to Buyer in the event
         of breach by Seller and retention of the deposit or
         earnest money by Seller in the event of a breach by
         Buyer; (iii) such other and further remedies to which
         the parties may be lawfully entitled; it being the in-
         tention that the remedies provided are cumulative and
         not exclusive of each other.
    In some agreements the parties (or either of them) are not
entitled to a choice of remedies but, rather than liquidated
damages, are required to seek such damages as they may be awarded
by a court of law:
         "In the event of breach, the parties shall be entitled
         only to those damages and redress as may be determined
         by a court of competent jurisdiction."
    The parties may provide that redress cannot be sought in the
courts but must come through binding arbitration.  It is
sometimes true that arbitration is not only quicker and less
expensive but more fair in terms of the rules under which the
proceedings are run and the knowledge of the decision-maker.



         "Any issue of law or fact and any dispute over the in-
         tent, interpretation, application, jurisdiction, legal-
         ity, enforceability, breach and remedies provided by 
         this agreement shall be submitted to binding arbitra-
         tion by and under the rules of American Arbitration
         Association.  The decision and findings of such arbi-
         tration shall be final and binding upon the parties and
         shall be enforceable by any court of competent
         jurisdiction, including the issuance of injunctions and
         subpoenas."
    The identity of the arbitrator is often a major consideration
as the AAA may not be the most knowlegeable body conerning real
estate matters.  If, however, another arbitrator is chosen, the
rules of the AAA or those of the state in which the property is
situated (many states have such rules) must be specified as
applying to the proceedings.
    Where a party may be seriously damaged by the other party's
breach, particularly its refusal to timely close, the default
provision may specifically allow for injunctory relief, even in
the event of an anticipated (but as yet not actualized) breach.


         "Buyer (Seller) shall be entitled to (i) injunctory
         relief, both temporary, preliminary and permanent, with-
         out need of bond or indemnity and (ii) a decree compell-
         ing performance of the terms of this agreement in the
         event of a breach or an anticipated or threatened breach
         of this agreement by Seller (Buyer).