Zimmermann v. Thompson
In Zimmermann v. Thompson, 16 Wis. 2d 74, 75, 114 N.W.2d 116 (1962), the court construed the buyer-default provision in a prior version of the WB Residential Offer to Purchase form, which provided:
"should the ... buyer fail to carry out this agreement, all money paid hereunder shall, at the option of the Seller, be forfeited as liquidated damages and shall be paid to or retained by the Seller, subject to deduction of broker's commission and disbursements, if any."
The buyer paid $ 500 down but failed to pay the balance of the purchase price. The seller sold the property to a third party, retained the down payment of the first proposed buyer, and sued for an amount alleged to be the actual damages after crediting the $ 500.
The court in Zimmerman held that the contract gave the seller the option of keeping the deposit money as liquidated damages, and that the seller also had the option of recovering whatever actual damages he could prove, but the seller did not have the right to both:
"If he chooses liquidated damages he may retain the down payment without further fuss or bother. If he chooses actual damages the contract gives him no additional present, simultaneous, right to retain the down payment. He has retained it and is now trying to expand the limited right of retention into a right to keep the money and apply it on whatever larger damages he can establish. The contract does not so provide." (Zimmermann, 16 Wis. 2d at 76-77.)
Because the contract gave the seller the right to retain the down payment only if he opted to take that amount in liquidated damages, the court concluded that in keeping the down payment the seller "had exercised his option to treat the cash in his hands as liquidated damages. Accordingly, no cause of action for actual damages remains to him." Id. at 77.