A buyer breaches a contract on a $400,000 home in Naples. The liquidated damages clause specifies 2% of the purchase price. The seller's actual damages from remarketing were $3,000. If challenged in Florida court, what amount would likely be awarded to the seller?
Correct Answer
D) $8,000 (liquidated damages)
Correct: D - $8,000 (liquidated damages). The liquidated damages amount of $8,000 (2% × $400,000) would likely be enforced as reasonable for a residential transaction, serving as the exclusive remedy regardless of actual damages being lower. Why not A: This option is incorrect because "$3,000 (actual damages)" does not match the rule tested by the question. The correct answer is "$8,000 (liquidated damages)". The liquidated damages amount of $8,000 (2% × $400,000) would likely be enforced as reasonable for a residential transaction, serving as the exclusive remedy regardless of actual damages being lower. Why not B: This option is incorrect because "$11,000 (both amounts combined)" does not match the rule tested by the question. The correct answer is "$8,000 (liquidated damages)". The liquidated damages amount of $8,000 (2% × $400,000) would likely be enforced as reasonable for a residential transaction, serving as the exclusive remedy regardless of actual damages being lower. Why not C: This option is incorrect because "$0 (clause is unenforceable)" does not match the rule tested by the question. The correct answer is "$8,000 (liquidated damages)". The liquidated damages amount of $8,000 (2% × $400,000) would likely be enforced as reasonable for a residential transaction, serving as the exclusive remedy regardless of actual damages being lower.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Consideration is something of value exchanged between parties to a contract, making the agreement legally binding. It can be money, a promise to act, a promise to refrain from acting, or anything else of value.
Contingencies are conditions written into a real estate contract that must be met before the transaction can close. If a contingency is not satisfied, the buyer can typically cancel the contract without penalty.
Contract termination occurs when a contract is ended or discharged, releasing both parties from their obligations. A contract can be terminated through performance, mutual agreement, operation of law, or breach.
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