In the event of a default by one party in a contract, the earnest money may be used as:
A) liquidated damages.
B) a measure of the actual damages.
C) a measure of the punitive damages.
D) a measure of the actual, punitive, and liquidated damages.

Question

Quizplus · Accepted Answer

Earnest money is typically used as liquidated damages, which are predetermined damages agreed upon in the contract to compensate the non-breaching party in the event of a default.

In the Event of a Default by One Party in a Contract