Contracts
If a buyer defaults on a Michigan purchase agreement and the contract contains a liquidated damages clause, the seller:
AMust sue for specific performance
BIs limited to retaining the earnest money as the agreed remedy✓ Correct
CCan seek unlimited damages
DMust return the earnest money
Explanation
A liquidated damages clause pre-determines the remedy for default. When the buyer defaults, the seller's recovery is limited to the agreed-upon liquidated damages, typically the earnest money deposit.
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