In Cloud v. Schenk, 1D03-2023 decided April 6, 2004 (Fla. 1DCA 2004), the Florida First District Court of Appeal held that a real estate sales contract that contained a liquidated damages clause that provided that in the event of a default, the seller would be entitled to keep the deposit as damages or seller at seller’s option could proceed to enforce the contract was deemed to be invalid. The liquidated damages clause was deemed invalid because the option to either retain the deposit as liquidated damages or to bring an action for actual damages, constitutes a penalty as a matter of law and is not valid. The decision relied upon the Florida Supreme Court authority of Lefemine v. Baron, 573 So.2d 326 (Fla. 1991).
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