Contracts
What is 'liquidated damages' provision in a Hawaii buyer's agency agreement?
AA. A provision requiring the buyer to pay the broker's actual damages if they breach the agreement
BB. A pre-agreed compensation amount the buyer owes the broker if the buyer breaches the buyer agency agreement (such as by purchasing through another agent)✓ Correct
CC. Damages calculated by a court after the breach occurs
DD. A provision giving the broker the right to return all compensation received if the buyer is dissatisfied
Explanation
A liquidated damages clause in a buyer agency agreement specifies a pre-agreed amount the buyer owes the broker if the buyer breaches the agreement (purchasing through another agent or not purchasing during the term). This provides certainty and avoids litigation to prove actual damages, similar to the earnest money provision in purchase contracts.
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