Colonial At Lynnfield, Inc. v. Sloan

870 F.2d 761 (1st Cir. 1989)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

Colonial (P) made a contract with Sloan (D) for D to buy a 49% interest in its Hilton Inns in Massachusetts. The sale was made necessary by P's renovation and expansion which caused a marked decrease in cash flow and profits as rooms had to be taken offline. D agreed to pay $3,375,000 for its 49% share of the hotels. D was given time to test the market in order to raise the monies by using a limited partnership. D was also given the option withdraw after the specified time if it could not raise the monies. If D wanted to go forward, it must announce that intention by a Notice to Proceed. The Notice to Proceed with subject to a $200,000 liquidated damages provision. D failed to meet the Notice to Proceed deadline of April 2, 1981. However, D agreed to close the deal on June 1, 1981. D also agreed that P would receive an additional $100,000 for the delay from the original deal. P obtained a loan from EssexBank of $318,000 and assigned the agreement proceeds to the bank. Eventually, D never performed and P was forced to sell a 50% share for $3.7 million. P then filed suit against D for the liquidated damages portion of the original contract. The trial court found the liquidated damages clause to be reasonable. D appealed.