At a training session in Decatur, Devon Lopez assumes that the seller may always keep earnest money as liquidated damages even if the contract does not authorize that remedy. Which answer is correct?
Correct Answer
B) That assumption is wrong because the contract must support the liquidated-damages remedy; the office should not invent it on its own.
Whether earnest money may be retained as liquidated damages depends on the contract language and the parties' rights, not on a broker's preference.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
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- → A Rhode Island licensee encounters a listing contract is drafted. What should the licensee remember?
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