## Facts

- Laura E. Mahoney agreed to sell residential real property to Claude W. Tingley and Nancy J. Tingley under an earnest money agreement.
- The agreed purchase price was reduced from $21,500 to $20,250 to match a Veterans Administration appraisal.
- The buyers paid $200 total earnest money ($50 plus an additional $150).
- The agreement provided that if title was insurable and the purchaser failed to complete the purchase, the earnest money would be forfeited as liquidated damages “unless seller elects to enforce this agreement.”
- At the buyers’ request, Mahoney moved out, but the buyers did not move in and later indicated they would not complete the transaction when it was ready to close.
- The buyers’ counsel sought to cancel the agreement; Mahoney’s counsel rejected cancellation and demanded performance.
- After the buyers did not complete the purchase, Mahoney sold the property to a third party for $19,000 and sued the buyers for $3,141.44 in alleged damages.

## Issues

1. Whether a liquidated-damages clause providing forfeiture of earnest money “unless seller elects to enforce this agreement” limits the seller to the earnest-money amount or permits recovery of greater actual damages after the buyer’s breach.

## Decision

- The Washington Supreme Court held the seller was not limited to the earnest-money amount.
- The clause created an option: the seller could accept forfeiture as liquidated damages or elect to “enforce” the agreement through other contract remedies, including damages.
- The Court affirmed the appellate reversal of summary judgment for the buyers and remanded for further proceedings.

## Legal Principles

- A liquidated-damages term is not exclusive unless the contract clearly states it is the sole remedy or is substituted for all other relief.
- Contract language providing forfeiture “unless seller elects to enforce this agreement” is permissive and preserves alternative breach-of-contract remedies.
- “Enforce this agreement,” in this context, may include a suit for damages measured by ordinary contract standards, not only specific performance.
- Summary judgment based solely on a misreading of an optional liquidated-damages clause is improper when the clause, properly construed, does not bar the claimed remedy.

## Conclusion

Because the earnest-money clause expressly allowed the seller to elect enforcement instead of accepting forfeiture, the seller could pursue actual damages beyond the $200 deposit, and summary judgment limiting recovery to the earnest money was reversed and the case remanded.


Mahoney v. Tingley, 529 P.2d 1068 (Wash. 1975)