ContractsIntermediateAlaska Exam

Under Alaska law, a buyer who defaults on a purchase agreement may face which remedies from the seller?

AOnly the return of the earnest money
BRetention of earnest money as liquidated damages, or actual damages, or a suit for specific performanceCorrect
CNo remedies — the seller simply re-lists the property, though outcomes can differ depending on circumstances
DA fine paid to the Alaska Real Estate Commission

Why Retention of earnest money as liquidated damages, or actual damages, or a suit for specific performance Is Correct

Answer B: Retention of earnest money as liquidated damages, or actual damages, or a suit for specific performance

When a buyer defaults, the seller may: (1) retain the earnest money as liquidated damages (if the contract so provides), (2) sue for actual monetary damages, or (3) in some cases seek specific performance (requiring the buyer to complete the purchase). The available remedies depend on the contract terms and the circumstances.

Exam Tip: Contracts

Contract questions frequently test the essential elements required for a valid contract. Remember: competent parties, mutual consent, lawful object, and sufficient consideration. Watch for void vs. voidable distinctions.

Key Contracts Terms in This Question

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