A buyer in Pennsylvania defaults on a PA Agreement of Sale by refusing to proceed with the purchase. Under the agreement, the seller elects to retain the hand money as liquidated damages. What does 'liquidated damages' mean in this context?
Correct Answer
B) A pre-agreed amount of damages specified in the contract that the seller retains as compensation
Liquidated damages in a PA Agreement of Sale are a pre-agreed amount specified in the contract (typically the hand money deposit) that the non-breaching party retains as compensation when the other party defaults, without the need for a court to determine actual damages.
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