When is an agreement of liquidated damages enforceable? (Choose two correct answers.)Multiple select question.If actual damages are difficult to prove in the event of a breach of a contractIf both the parties agree upon the exact specifications of the breach of the contractIf the amount of damages is reasonableIf an amount is large enough to be considered a penalty
Question
When is an agreement of liquidated damages enforceable? (Choose two correct answers.)Multiple select question.If actual damages are difficult to prove in the event of a breach of a contractIf both the parties agree upon the exact specifications of the breach of the contractIf the amount of damages is reasonableIf an amount is large enough to be considered a penalty
Solution
An agreement of liquidated damages is enforceable:
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If actual damages are difficult to prove in the event of a breach of a contract. This is because liquidated damages are a pre-determined amount that the parties agree will satisfy any potential damages if a breach occurs. They are often used when it would be difficult to calculate the actual damages.
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If the amount of damages is reasonable. The amount of liquidated damages must be a reasonable estimate of the actual damages that might result from a breach. If the amount is excessive, it may be considered a penalty and not enforceable.
Similar Questions
If a liquidated damages clause that touches on the limitation or exclusion is unconscionable, the ________. (Choose two correct answers)Multiple select question.exclusion is enforcedlimitation is enforcedexclusion is not enforcedlimitation is not enforced
Assuming a liquidated damages clause, which of the following is considered prima facie unconscionable? (Choose one correct answer)Multiple choice question.Any attempt to limit consequential damages for injury caused to a person by consumer goodsAny attempt to delay delivery of consumer goodsAny attempt to advance delivery of consumer goodsAny attempt to enhance consequential damages for injury caused to a person by consumer goods
A court was reviewing a sales contract that contained the following phrase: "If delivery of specified goods is delayed by one day, the seller will pay one million dollars in compensation to the buyer". The purchase price of the goods is $3,000. The court refused to enforce the compensation provision because: Blank______.Multiple choice question.according to the UCC, a liquidated damages provision in a sales contract is per se unconscionablea court can refuse to enforce any provision in any contract at its discretionit exceeds the liquidated damages cap established by the Uniform Commercial Code (UCC)it is unconscionable
Which of the following is NOT a remedy for a breach of contract?*A) Specific performanceB) Liquidated damagesC) RescissionD) Exemplary damages
Exclusion of limitation on consequential damages is only permitted where the ______________.Multiple choice question.loss due to the damages is commercialdamages are decided by the injured partyexclusion of the damages is conscionablelimitation on the damages is reasonable
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