Anne contracted with Miller Machines, Inc., to purchase a J5430 lathe machine for $57,000. The parties agreed that Anne would send one-half of the money as a deposit and would pay the balance upon delivery. They also agreed to the following provision:

In the event of non-payment of the balance of the purchase price reflected herein on due date and in the manner recorded or on such extended date which may be caused by late delivery on the part of [the seller], the Customer shall be liable for: (1) immediate payment of the full balance recorded herein; and (2) payment of interest at the rate of 12 percent per annum calculated on the balance due, when due, together with any attorney's fees, collection charges and other necessary expenses incurred by [the seller].

When the machine arrived five days late, Anne refused to accept it, stating that she had purchased a substitute machine elsewhere. Anne requested the return of her deposit but Miller refused. Anne sued Miller for the return of its deposit. Miller counterclaimed for full performance of the contract seeking an order that Anne accept delivery of the lathe machine and pay the entire balance of the contract.

1. What arguments would support the claim by Anne for the return of the deposit?
2. What arguments would support the claim by Miller for full performance of the contract?
3. Who should prevail? Explain.