ContractsQuestion 60 of 120
If a buyer defaults, a contract clause that pre-sets the seller's damages (often the earnest money) is called a:
a.Specific performance clause
b.Liquidated damages clause
c.Subordination clause
d.Habendum clause
Explanation
A liquidated damages clause fixes in advance the amount one party recovers if the other defaults, avoiding the need to prove actual damages. In many residential contracts, the earnest money serves this role.
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