Which of the following statements is true with respect to the law of damages?
A)Damages are awarded for a breach of a condition but not for a breach of warranty.
B)If a contract contains a liquidated damages clause,the party who has breached the contract has agreed to pay to the party wronged an amount equal to all the loss that directly and naturally flows from the breach.
C)Damages are an order from the court for the breaching party to perform the contract as he or she agreed to do.
D)Damages are intended to punish the wrongdoer for breaching the contract.
E)A deposit is an amount of money a party to a contract agrees to forfeit if he or she breaches the contract.

Question

Quizplus · Accepted Answer

E is correct because a deposit serves as a security for the performance of the contract, and it is agreed upon that this amount can be forfeited if the party who made the deposit breaches the contract. This is a common practice in contracts as a means to ensure compliance or to compensate for potential losses in case of breach. The other options are incorrect because: A) damages can be awarded for both breaches of conditions and warranties, depending on the circumstances; B) a liquidated damages clause specifies a predetermined amount to be paid in the event of a breach, not necessarily equal to all losses; C) damages are monetary compensation, not an order for specific performance; D) the primary purpose of damages is to compensate the injured party, not to punish the breacher.

Which of the Following Statements Is True with Respect to the Law