## Facts

- Euel D. Vines and Etta Vines agreed to buy a condominium unit from Orchard Hills, Inc. for $78,800 and paid $7,880 as a down payment.
- The contract expressly designated the down payment as “liquidated damages.”
- After the buyers’ employment-related move, they notified the seller they would not close; it was undisputed the buyers breached and the seller did not.
- At trial, the buyers presented evidence that the unit’s market value had risen substantially by the time of trial; neither party offered evidence of value or damages at the time of breach.
- The trial court treated the post-contract appreciation as showing the seller was not harmed and ordered return of the full down payment plus interest.
- The seller appealed, arguing the liquidated damages clause should be enforced and that valuation at trial was improper.

## Issues

1. Whether defaulting purchasers may recover a down payment labeled as liquidated damages through restitution based on unjust enrichment.
2. Who bears the burden to show that retention of the down payment exceeds the seller’s actual loss.
3. Whether the seller’s loss (and any claimed net gain) must be measured at the time of breach rather than at the time of trial.

## Decision

- The Supreme Court of Connecticut set aside the judgment for the buyers and remanded.
- The court held that a liquidated damages clause is presumptively valid, and the breaching buyers bore the burden to prove the clause was unenforceable or that retention would yield net unjust enrichment.
- The court ruled the relevant time for measuring the seller’s damages is the time of breach, not the time of trial.
- Because the buyers offered no evidence of the seller’s damages at breach (or otherwise showed a net gain beyond compensatory loss), they failed to establish unjust enrichment.

## Legal Principles

- A liquidated damages provision carries a presumption of validity; the party challenging enforcement bears the burden of proof.
- A breaching party may obtain restitution only by proving the nonbreaching party realized a net gain beyond compensation for its loss.
- In contract cases, loss for purposes of damages (and related unjust enrichment analysis) is measured at the time of breach, not by later market changes.
- Contract remedies are compensatory; the nonbreaching party may not retain more than the amount that compensates for the loss of the bargain.

## Conclusion

A defaulting buyer cannot recover a contractually designated liquidated-damages deposit merely by showing later appreciation; restitution requires proof that, measured at the time of breach, the seller’s actual damages were less than the amount retained, resulting in net unjust enrichment.


Vines v. Orchard Hills, Inc., 181 Conn. 501 (Conn. 1980)