Contracts
A Mississippi contract states that in the event of default by the buyer, the seller retains the earnest money as 'liquidated damages' and cannot sue for additional damages. This type of clause is called a:
ASpecific performance clause
BLiquidated damages clause✓ Correct
CHold harmless clause
DRescission clause
Explanation
A liquidated damages clause pre-establishes the amount of damages payable upon breach. By accepting the earnest money as liquidated damages, the seller agrees that this amount fully compensates them for the buyer's default.
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