A construction contractor entered into a contract to build a family room addition onto Harry's home for $25,000.In order to encourage timely performance,the agreement provided that the contractor would be penalized $5,000 as liquidated damages for each day that the project was late in getting finished.The contractor was 30 days late in finishing the project,but otherwise met the terms of the agreement.What is most likely in this situation?
A) The liquidated damages clause would not be enforced due to its being excessive.
B) The liquidated damages clause would be limited to $25,000, the amount of the contract price.
C) The liquidated damages clause would be enforced.
D) The liquidated damages clause would not be enforced because the parties made a mutual mistake about when the contract would be finished.
E) The liquidated damages clause would be enforced only if it can be shown that the contractor has made that much in profits over the past six months.

Question

Quizplus · Accepted Answer

The liquidated damages clause would likely not be enforced because the penalty of $5,000 per day is excessive and disproportionate to the contract price, making it more of a penalty than a reasonable estimate of damages.

A Construction Contractor Entered into a Contract to Build a Family