Suppose a buyer fails to complete, and as a result the seller is unable to complete their own related purchase, and so loses their deposit on that purchase. Can the seller (a) forfeit the deposit from their buyer, and (b) also claim compensation for the deposit that they have lost on their related purchase?

The starting point is to say that the purpose of damages for breach of contract is to put the injured party into the same position that they would have been in had the contract been performed satisfactorily. In this case, the seller would have lost the deposit on their related purchase. On the other hand, they would have gained the deposit forfeited by their own buyer. Thus, you have to offset the two against each other. What you cannot do is claim both deposits – instead, you calculate the loss and you offset any gain against any loss.

Note that the Standard Conditions do require that any gain be offset against the loss. There is nothing to prevent the parties agreeing otherwise (ie that any gain does not have to be offset against any loss incurred – provided that this will not infringe the rule on penalties). Ng & anor v Ashley King (Developments) Ltd [2010] EWHC 456 (Ch) (access free at www.practicalconveyancing.co.uk).