Contracts
In Colorado, a 'liquidated damages' clause in a real estate contract specifies:
AA. That the non-breaching party may recover unlimited damages
BB. A predetermined amount of damages (often the earnest money) that one party agrees to accept as full compensation if the other party breaches✓ Correct
CC. That only the buyer can claim damages
DD. That damages are determined by a court
Explanation
A liquidated damages clause pre-establishes the amount of damages for a breach. In Colorado residential contracts, if the buyer defaults, the seller's remedy is often limited to retaining the earnest money as liquidated damages. This provides certainty for both parties and avoids costly litigation over actual damages.
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