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Stockloser v Johnson, [1954] All ER 630 (CA)

Facts:

P agreed to buy machinery from D. Price was payable in installments. If default D was entitled to retake possession of machinery and retain payments made by P

Issue(s):

Is P entitled to get the money back?

Ratio:

Forfeiture clause is not recoverable unless it can be shown that it is unfair or unreasonable for it not to be recoverable.

Where there is a forfeiture clause or the money is expressly paid as a deposit – then buyer in default cannot recover money.
**He may have a remedy in equity
**To give rise to equity must have 2 things:
***Forfeiture clause must be of penal nature, AND
***Unconscionable for seller to retain the money

Analysis:

When there is no forfeiture clause – if money is handed over in part payment of purchase price, and buyer defaults, so long as seller keeps contract open and available for performance, the buyer cannot recover money.
**But once seller rescinds the contract, the buyer is entitled to recover his money, subject to a claim for damages by the seller

Holding:

It is not unconscionable for D to keep the money

Comments:

Forfeiture clause is treated the same way as a penalty clause, even though they are different


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