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
Is P entitled to get the money back?
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
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
It is not unconscionable for D to keep the money
Forfeiture clause is treated the same way as a penalty clause, even though they are different