Under Maryland contract law, when a buyer defaults on a residential purchase contract and the contract contains a liquidated damages clause, what does that clause typically represent?
Correct Answer
B) A pre-agreed amount, usually the earnest money deposit, that serves as the seller's sole remedy for the buyer's breach
A liquidated damages clause in a Maryland residential purchase contract pre-establishes the amount of damages recoverable upon breach, typically designating the earnest money deposit as the seller's sole and exclusive remedy. This prevents the seller from pursuing additional actual damages beyond the deposit amount when the buyer defaults, provided the clause is enforceable under Maryland contract principles.
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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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