Contracts
A Massachusetts P&S has a 'liquidated damages' clause. For the clause to be enforceable, the amount must be:
AExactly equal to the buyer's loan costs
BA reasonable pre-estimate of actual damages, not a penalty✓ Correct
CMore than 10% of the purchase price
DApproved by the Massachusetts Board of Registration
Explanation
Liquidated damages provisions are enforceable in Massachusetts when the amount is a reasonable pre-estimate of actual damages and actual damages would be difficult to determine—not when it serves as a penalty.
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