The amount of liquidated damages included in a contract that would be upheld by a court:
A) must be reasonable in light of the inconveniences or lack of feasibility of obtaining an adequate remedy.
B) may be so high as to be punitive to the breaching party.
C) may be regarded as a penalty.
D) must be exactly the amount lost in the breach.

Question

Quizplus · Accepted Answer

Liquidated damages must be a reasonable estimate of the damages that might be incurred from a breach. They are not meant to be punitive or a penalty, and they do not need to match the exact amount lost due to the breach.

The Amount of Liquidated Damages Included in a Contract That