Contracts
In Tennessee, a 'liquidated damages' clause in a purchase agreement typically specifies that:
AThe buyer forfeits the earnest money as the seller's sole remedy if the buyer defaults✓ Correct
BThe seller pays triple damages if they breach
CDamages are determined by a court after the fact
DNo damages are owed in case of breach
Explanation
A liquidated damages clause pre-specifies the amount of damages for breach (typically the earnest money), providing certainty for both parties. If the buyer defaults, the seller retains the earnest money as the agreed remedy.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
Math Concepts
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