Contracts
What is a 'liquidated damages' clause in a Delaware real estate purchase agreement?
AA clause allowing either party to modify the purchase price after signing
BA pre-agreed amount of damages (typically the earnest money deposit) that the non-breaching party receives if the other party defaults — avoiding lengthy litigation over actual damages✓ Correct
CA clause requiring the seller to repay the buyer's closing costs if the deal falls through
DA clause allowing the court to determine damages at the time of breach
Explanation
A liquidated damages clause pre-specifies the compensation for breach — typically the earnest money deposit. If the buyer defaults, the seller keeps the deposit; if the seller defaults, the buyer gets the deposit back (plus sometimes an additional amount).
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