Contracts
A Massachusetts P&S specifies $20,000 as liquidated damages if the buyer defaults. If the seller's actual damages from the buyer's default are $50,000, the seller can recover:
A$50,000 (actual damages always override liquidated damages)
B$20,000 (the agreed liquidated damages amount)✓ Correct
C$70,000 (actual plus liquidated)
DNothing because the liquidated damages clause is void
Explanation
If a valid liquidated damages clause is in the contract, the parties are bound by that amount—the seller cannot later seek actual damages in excess of the liquidated amount (unless the clause is deemed a penalty and found unenforceable).
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