Seller v. Buyer: Contract Dissolution and Penalty Proportionality

An individual entered into a contract to purchase property, making an initial payment, but subsequently refused to complete the sale, leading the seller to seek contract dissolution and retention of the down payment as damages. The lower court upheld the seller's right to dissolve the contract and keep the payment based on a forfeiture clause stipulated in the agreement. The reviewing court quashed this decision, reasoning that in contracts involving a stipulated penalty clause, dissolution of the contract due to non-performance necessitates judicial review of the penalty's proportionality to the harm suffered, preventing the automatic enforcement of a forfeiture clause if it results in an excessive penalty, even if stipulated by the parties.