Under Massachusetts law, when a buyer defaults on a purchase and sale agreement and the seller retains the deposit as liquidated damages, what is the legal effect on the seller's right to pursue additional remedies?
Correct Answer
A) The seller's retention of the deposit as liquidated damages is the exclusive remedy, barring further claims against the defaulting buyer.
Under Massachusetts contract law, when a purchase and sale agreement contains a valid liquidated damages clause and the seller elects to retain the deposit as liquidated damages upon buyer default, that election serves as the exclusive remedy. The seller cannot simultaneously retain the deposit as liquidated damages and pursue additional monetary damages or specific performance — electing liquidated damages forecloses other remedies.
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