Contracts
Which of the following best describes 'liquidated damages' in a real estate contract?
ADamages the court awards after a trial
BA predetermined amount of damages specified in the contract as the remedy for breach✓ Correct
CThe earnest money paid by the buyer
DAttorney fees awarded to the prevailing party
Explanation
Liquidated damages are a specific amount agreed upon in the contract as compensation if a party breaches. In many real estate contracts, the earnest money deposit serves as liquidated damages — the seller's sole remedy if the buyer defaults without cause.
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