Perkins v. Spencer, 121 Utah 468, 243 P.2d 446 (Utah 1952)
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- Citation: 121 Utah 468, 243 P.2d 446 (1952)
- Court / Year: Utah Supreme Court, 1952
- Topic tags: forfeiture · liquidated_damages · penalty_doctrine · equitable_interest
- Facts: The Spencers sold a Provo home to the Perkinses under a Uniform Real Estate Contract (URC). After the buyers defaulted, the sellers declared a forfeiture of the contract — under the clause forfeiting all prior payments as liquidated damages — and sought to evict. The buyers had made a down payment of more than 25% of the price plus monthly payments roughly equal to the property’s reasonable rental value, with no proven decline in market value or loss of an advantageous bargain. The buyers sought cancellation and return of their money (or reformation), resisting the forfeiture.
- Holding: A URC forfeiture clause is enforceable only as valid liquidated damages. Where enforcing it would permit an “unconscionable and exorbitant recovery, bearing no reasonable relationship to the actual damage suffered,” the clause is an unenforceable penalty, and the seller is limited to actual damages. On these facts the forfeiture of all payments was a penalty; the Court held the clause unenforceable and remanded to determine the sellers’ actual damages.
- Reasoning: Forfeiture provisions in installment land contracts are tested under liquidated-damages law: liquidated damages are enforceable only if reasonable in relation to anticipated or actual loss; a sum grossly disproportionate to the seller’s loss is a penalty equity will not enforce. The Court identified the seller’s recoverable items as (1) loss of an advantageous bargain; (2) damage to or depreciation of the property; (3) any decline in value due to market change; and (4) the fair rental value of the property during the buyer’s occupancy.
- Practical impact for CFD operators/buyers: This is Utah’s substantial-equity bar — reached through contract/equity rather than a foreclosure statute. The more a buyer has paid, the more likely full forfeiture is struck as a penalty, forcing the seller back to the actual-damages measure. Operators forfeiting a high-equity buyer’s payments risk losing the forfeiture entirely. Functionally Utah’s analogue to skendzel-v-marshall-1973.
- Good-law status: Good law; foundational. Damages measure refined in Cole v. Parker, 5 Utah 2d 263, 300 P.2d 623 (1956) (seller credited with the difference between contract price and resale price).
- Source (retrieved): https://law.justia.com/cases/utah/supreme-court/1952/7565-0.html · Verified: 2026-06-08
Jurisdictions that follow / cite: utah
Disclaimer. Legal information, not legal advice. Confirm the opinion is still good law before relying on it.