Contracts
A Vermont buyer makes a purchase offer that includes an earnest money deposit of $5,000. The seller accepts. If the buyer defaults, the seller's typical remedy under a liquidated damages clause is to:
ASue the buyer for the full difference between the contract price and the ultimate sale price
BRetain the $5,000 earnest money as liquidated damages✓ Correct
CRequire the buyer to complete the purchase
DSeek punitive damages equal to three times the earnest money
Explanation
A liquidated damages clause (common in Vermont purchase contracts) limits the seller's remedy upon buyer default to retaining the earnest money deposit. This prevents protracted litigation while providing the seller with a predetermined recovery.
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