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Sonia Apte (Manager)     30 November 2012

Use of word "forfeit"

In a legal agreement for purchase of a property, wherein my company is paying another company ABC the purcase amount in three parts. Their draft agreement states as such:

If at any point, company ABC gives written notice of termination of this agreemnt, my company will forfeit any monies paid to company ABC.

The word "forfeit' means to give up / surrender. I cannot understand why my company should "forfeit" or lose the money we have paid if the other company ABC decides to terminate the agreement.

Does this word mean something else in legal terms? Please help. Sonia



Learning

 1 Replies

Sumanth Nookala (Lawyer)     30 November 2012

What is the contract for?

Prima facie, clause of forfeiture as you described sounds uncoscionable and open to challenge.

The principle governing the construction of a clause for forfeiture is that it must always be construed strictly as against the person who is trying to take advantage of it and effect should be given to it only so far as it is rendered absolutely necessary to do so by the wording of the clause.


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