Contracts & ExecutionQuestion 65 of 690
An owner includes a liquidated damages clause of $500 per day for late completion. This clause is enforceable if:
a.The amount represents a reasonable estimate of actual damages at the time the contract was signed
b.The amount is very high to punish the contractor
c.It is approved by CSLB
d.The contractor waives their right to arbitration
Explanation
Liquidated damages are enforceable if: (1) damages were difficult to estimate at contract signing, and (2) the amount is a reasonable estimate of probable harm — not a penalty.
Law Reference: Civil Code §1671Practice all 690 questions free — no signup required.
Related questions on this topic
- A contractor abandons a job without justification after receiving a substantial deposit. The contractor may face:
- Who is primarily responsible for obtaining building permits on a construction project?
- A contract clause that shifts responsibility for delays outside the contractor's control to the owner is called:
- A contractor must provide an owner with a "Notice to Owner" (preliminary notice) primarily to:
- Under a "time and materials" (T&M) contract, the owner pays:
- Which contract type places the MOST financial risk on the contractor?
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against California CSLB Contractor License Law & Business Exam · How we review