Contracts
A Rhode Island buyer defaults on a purchase contract by refusing to close. The seller's remedy of retaining the buyer's deposit as 'liquidated damages' is valid only if:
AThe deposit amount was more than 10% of the purchase price
BThe contract contained a liquidated damages clause agreed to by both parties✓ Correct
CThe seller can prove actual damages exceed the deposit
DThe default occurred within 30 days of signing
Explanation
Liquidated damages provisions are enforceable in Rhode Island only when the contract contains a specific clause agreed to by both parties designating the deposit as the seller's sole remedy in the event of buyer default.
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