Contracts
A buyer in Alaska wishes to back out of a purchase agreement after all contingencies have been removed. The seller chooses to keep the earnest money and release the buyer. This arrangement is called:
ASpecific performance
BAccord and satisfaction
CMutual rescission
DLiquidated damages✓ Correct
Explanation
When the seller keeps the earnest money as compensation for the buyer's breach (as specified in the contract), this is liquidated damages — a pre-agreed remedy for breach. Accord and satisfaction involves settling a disputed debt; mutual rescission involves both parties agreeing to cancel.
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