A Hawaii purchase contract contains a clause stating that if the buyer defaults, the seller's sole remedy is to retain the earnest money deposit as liquidated damages. The buyer later defaults and the seller wants to sue for specific performance instead of retaining the deposit. Which of the following is most accurate under Hawaii law?
Correct Answer
C) If the contract specifies that liquidated damages are the seller's sole remedy, the seller is generally limited to retaining the earnest money and cannot also pursue specific performance
Under Hawaii contract law, if the parties have expressly agreed in the purchase contract that liquidated damages (retention of the earnest money) constitute the seller's sole remedy upon buyer default, the seller is generally bound by that contractual limitation and cannot simultaneously pursue specific performance. The parties' mutual agreement to limit remedies is enforceable when the liquidated damages amount is a reasonable pre-estimate of damages and not a penalty.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A purchase agreement is a legally binding contract between a buyer and seller that outlines the terms and conditions for the sale of real property. It is also commonly called a sales contract, purchase and sale agreement, or earnest money agreement.
Specific performance is a court-ordered remedy that compels the breaching party to fulfill their obligations under the contract rather than simply paying monetary damages. It is an equitable remedy used when monetary damages would be inadequate.
The Statute of Frauds is a legal requirement that certain types of contracts must be in writing and signed to be enforceable. In real estate, all contracts for the sale of land or interests in land must be in writing.
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