Contracts
Under Oregon contract law, 'liquidated damages' in a purchase agreement mean:
AThe seller receives all damages allowed by law plus the earnest money
BThe parties have pre-agreed on a specific sum (typically the earnest money) as the total remedy for buyer's breach, limiting the seller's recovery to that amount✓ Correct
CThe buyer's attorney sets the damages after breach
DDamages are calculated based on the property's appraised value at the time of breach
Explanation
A liquidated damages clause pre-determines the compensation for breach (usually the earnest money deposit). In Oregon, if the liquidated damages provision is properly drafted and the amount is a reasonable estimate of actual damages (not a penalty), the seller's remedy for buyer's breach is limited to retaining the earnest money — they cannot sue for additional damages. Both parties must agree to this provision.
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