Colonial at Lynnfield, Inc. (Colonial) (plaintiff) agreed to sell a 49 percent interest in its Hilton Inn to Colonial Associates (Associates) (defendant) for $3,375,000. The contract provided for $200,000 in liquidated damages if the parties did not complete the transaction due to the buyer’s default. The closing was set for June 1, 1981. On May 29, Associates asked Colonial to extend the closing date because it was unable to obtain financing to complete the purchase. Colonial refused and held Associates in breach. On September 1981, Colonial and Lincoln National Development Corporation of Indiana closed on an agreement by which Lincoln would purchase 50 percent of the subject property for $3.7 million. There was also a contingency in which Lincoln would purchase a 49 percent interest for $3,626,000 if Colonial’s mortgage holder did not approve the sale of a 50 percent interest. Colonial sued to enforce the liquidated damages clause in its contract with Associates. The district court found in favor of Colonial. Associates appealed.