ContractsBreach_and_remediesEASY
A contract provides that if the buyer defaults, the seller may retain the $10,000 earnest money as the agreed-upon damages. The buyer defaults. What happens to the earnest money?
Correct Answer
A) It is retained by the seller as liquidated damages
When a contract contains a liquidated damages provision, the earnest money may be retained by the seller as the agreed remedy if the buyer defaults.
Answer Options
A
It is retained by the seller as liquidated damagesB
It is split between the buyer and sellerC
It is returned to the buyer regardlessD
It is forfeited to the stateWhy This Is the Correct Answer
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Why the Other Options Are Wrong
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Deep Analysis of This Contracts Question
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Background Knowledge for Contracts
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Real World Application in Contracts
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Related Topics & Key Terms
Key Terms:
breach_and_remediescontractsliquidated_damagesearnest_money
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