Daniel Martin and John Duke contracted with J & S Distributors, Inc., to purchase a KIS Magnum Speed printer for $17,000. The parties agreed that Martin and Duke would send one-half of the money as a deposit and would pay the balance upon delivery. They also agreed to the following provision:
In the event of non-payment of the balance of the purchase price reflected herein on due date and in the manner recorded or on such extended date which may be caused by late delivery on the part of [the seller], the Customer shall be liable for: (1) immediate payment of the full balance recorded herein; and (2) payment of interest at the rate of 12 percent per annum calculated on the balance due, when due, together with any attorney’s fees, collection charges and other necessary expenses incurred by [the seller].
When the machine arrived five days late, Martin and Duke refused to accept it, stating that the company had purchased a substitute machine elsewhere. Martin and Duke requested the return of its deposit but J & S refused. Martin and Duke sued J & S for the return of its deposit. J & S counterclaimed for full performance of the contract seeking an order that Martin and Duke accept delivery of the KIS machine and pay the entire balance of the contract.
(a) What arguments would support the claim by Martin and Duke for the return of the deposit?
(b) What arguments would support the claim by J & S for full performance of the contract?
(c) Who should prevail? Explain.
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