Contracts
In South Carolina, a buyer who defaults on a ratified purchase contract forfeits their earnest money under a 'liquidated damages' clause. This amount must:
AEqual exactly 10% of the purchase price
BBe a reasonable estimate of the seller's damages, not a penalty✓ Correct
CBe approved by SCREC before enforcement
DBe equal to the agent's commission
Explanation
For a liquidated damages clause to be enforceable, the amount must represent a reasonable estimate of the anticipated harm from breach, not an unreasonable penalty. Courts can invalidate clauses that are grossly excessive.
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