Taylor v. Sanders

In this action at law upon a promissory note, the dispositive question is whether the instrument was enforceable as representing liquidated damages or whether the note was invalid because it constituted a penalty.

Appellant Jeremy W. Taylor, the plaintiff below, agreed to sell and appellees Jack M. Sanders and Barbara C. Sanders, the defendants below, agreed to purchase a house and lot in Loudoun County for $63,900. On November 27, 1981, the parties executed three instruments. They signed a sales contract which provided for a deposit by the purchasers of $3,000 “in the form of ” a note in that…