This section contains the nature of the case and procedural background.

P and D entered into an earnest money agreement where P agreed to sell residential property to D. The price was eventually reduced to $20,250. D deposited $200 as earnest money. The agreement contained the following clause: If title is so insurable and purchaser fails or refuses to complete purchase, the earnest money shall be forfeited as liquidated damages unless seller elects to enforce this agreement. D canceled the agreement. P sold the property to a third party for $19,000. P sued for damages of $3,141.44. The trial court ruled that the liquidated damages clause was valid and enforceable and that P was entitled to the $200 and no more. D got the summary judgment. The court of appeals reversed. D appealed.

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