Sean and Janine sign an agreement that provides for the payment of $3,000 by the party that commits a material breach of the contract. It appears at the time the clause is signed that a breach by either party will create substantial damages. This clause is a
A)rescission clause.
B)liquidated damage clause.
C)penalty clause.
D)nominal damage clause.

Question

Sean and Janine sign an agreement that provides for the payment of $3,000 by the party that commits a material breach of the contract. It appears at the time the clause is signed that a breach by either party will create substantial damages. This clause is a​
A)rescission clause.
B)liquidated damage clause.
C)penalty clause.
D)nominal damage clause.

Quizplus · Accepted Answer

This clause is a liquidated damage clause because it specifies a predetermined amount of money that must be paid as damages for failure to perform under a contract, which is common in contracts where actual damages may be difficult to calculate.

Sean and Janine Sign an Agreement That Provides for the Payment