Bachour v. Mason, No. M2012-00092-COA-R3-CV (Tenn. Ct. App. May 30, 2013)
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- Citation: Jalal Bachour v. Devin Mason, et al., No. M2012-00092-COA-R3-CV (Tenn. Ct. App. May 30, 2013) (Cottrell, P.J., M.S.). Appeal from the Chancery Court for Cannon County, No. 0873.
- Court / Year: Tennessee Court of Appeals, Middle Section at Nashville, 2013.
- Topic tags: forfeiture · liquidated_damages · penalty_doctrine
- Facts: Two contracts governed the sale of commercial property. The second added a clause providing that the buyer could **retain 75,000. The trial court ruled the buyer owed the full price.
- Holding: Affirmed. The $75,000 clause was not a valid liquidated-damages provision but an unenforceable penalty. Liquidated-damages clauses “are subject to close scrutiny because of the public policy against forfeitures.” To be enforceable there must be “a reasonable relationship between the stipulated amount and the amount of damages that might reasonably be expected”; absent that relationship the clause is “an unlawful penalty … not enforceable.” “Because forfeitures and penalties are not favored, any doubt as to whether a sum is a penalty or liquidated damages will generally be resolved as the former.”
- Reasoning: Tennessee law disfavors penalties and forfeitures. A sum bearing no reasonable relationship to anticipated breach damages operates in terrorem to compel performance and is therefore a penalty, not enforceable liquidated damages (applying Kimbrough & Co. v. Schmitt, 939 S.W.2d 605 (Tenn. Ct. App. 1996), and Guiliano v. Cleo, Inc., 995 S.W.2d 88 (Tenn. 1999)).
- Practical impact for CFD operators/buyers: Although not itself a contract-for-deed case, Bachour states the Tennessee public-policy-against-forfeitures rule that frames every installment-land-contract default dispute. A CFD clause that lets the seller retain all installments as “liquidated damages” is vulnerable to being struck as a penalty where the retained sum dwarfs the seller’s actual loss — the doctrinal hook a Tennessee buyer with substantial equity uses to resist strict forfeiture.
- Good-law status: good_law.
- Source (retrieved): https://www.tncourts.gov/sites/default/files/bachourj_opn.pdf · Verified: 2026-06-08
Jurisdictions that follow / cite: tennessee
Disclaimer. Legal information, not legal advice. Confirm the opinion is still good law before relying on it.