Contracts
What is the difference between liquidated damages and actual damages in a real estate contract?
ALiquidated damages are paid immediately; actual damages are paid at closing
BLiquidated damages are pre-determined amounts (often earnest money); actual damages are proven losses from breach✓ Correct
CThey are the same thing
DLiquidated damages only apply to commercial contracts
Explanation
Liquidated damages are pre-agreed amounts specified in the contract (often earnest money) to serve as damages for breach. Actual damages require proof of real losses suffered. Earnest money clauses typically provide liquidated damages.
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