## Facts

- Homeowners William and Eileen Mandle agreed in writing to sell their Terre Haute, Indiana residence to H. Joseph and Kathryn Owens for $30,000.
- The Owenses paid $300 earnest money; the contract stated that if the offer was accepted and the buyers failed to complete the purchase, the $300 “will be forfeited” to the sellers.
- The Mandles performed all contract obligations.
- After acceptance, the Owenses repudiated the contract, stating they found another property they liked better.
- The Mandles, relying on the expected sale, paid $1,000 earnest money on a home in Maryland and pursued financing.
- The Mandles attempted to resell the Terre Haute property, later listing with a realtor; they resold about twenty days after repudiation for $29,500.
- The Mandles incurred additional costs tied to resale and relocation, including a realtor’s commission, a refinancing fee, and motel expenses.
- The Mandles sued for breach and sought damages beyond the $300 deposit; the trial court entered judgment for the Owenses on the theory the Mandles suffered no compensable injury.

## Issues

1. Whether the contract’s $300 earnest-money forfeiture clause barred the non-breaching sellers from recovering additional actual damages for the buyers’ breach.
2. What measure of damages applies when a buyer repudiates an executory real-estate sales contract and the seller resells within a short time at a different price and with added expenses.

## Decision

- The Indiana Court of Appeals reversed and remanded.
- The earnest-money forfeiture clause was not an exclusive remedy that precluded recovery of actual damages.
- The trial court erred in finding no injury where evidence showed a lower resale price and additional expenses arguably caused by the breach.
- On remand, the sellers were entitled to attempt to prove recoverable damages measured by the contract/resale price differential and certain consequential costs, with the $300 deposit accounted for in the final computation.

## Legal Principles

- Contract damages aim to place the non-breaching party in the position it would have occupied had the contract been performed.
- In a buyer’s breach of a land-sale contract, the seller may recover the difference between the contract price and the property’s value at breach; a resale price within a reasonable time may be used as evidence of value.
- Reasonably incurred, breach-caused consequential expenses may be recoverable, subject to proof of causation, reasonableness, and mitigation.
- An earnest-money forfeiture term does not, without clear language establishing exclusivity or valid liquidated damages, bar recovery of additional actual damages.
- Earnest money retained after breach may be credited against the seller’s total proven damages rather than operating as a cap on recovery.

## Conclusion

The appellate court held that the sellers were not limited to a $300 forfeiture and could pursue proof of actual breach damages, including the contract-to-resale price difference and properly attributable consequential expenses, and it remanded for a correct damages determination.


Mandle v. Owens, 330 N.E.2d 362 (Ind. Ct. App. 1975)