ContractsIntermediateDelaware Exam
What is 'liquidated damages' in a Delaware real estate contract?
ADamages calculated after a trial by a court
BA pre-determined amount agreed upon as the remedy for breach, often the earnest money depositCorrect
CDamages caused by water or flooding on the property
DThe seller's unrealized profit if the buyer defaults
Why A pre-determined amount agreed upon as the remedy for breach, often the earnest money deposit Is Correct
Answer B: A pre-determined amount agreed upon as the remedy for breach, often the earnest money deposit
Liquidated damages are a contractually agreed-upon sum (often the earnest money) that the parties agree in advance will serve as the remedy in case of breach, avoiding the need to prove actual damages.
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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.
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