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Question (Category: 0)
Carnack contracts to sell his house and lot to Willard for $100,000. The terms of the contract call for Willard to pay 10% of the purchase price as a deposit toward the purchase price, or as a down payment. The terms further stipulate that should the buyer breach the contract, Carnack will retain the deposit as liquidated damages. Willard pays the deposit, but because her expected financing of the $90,000 balance falls through, she breaches the contract. Two weeks later, Carnack sells the house and lot to Balkova for $105,000. Willard demands her $10,000 back, but Carnack refuses, claiming that Willard?s breach and the contract terms entitle him to keep the deposit. Discuss who is correct.Justify your answer using information from your reading and be sure to:1. Discuss the elements of liquidated damages.2. 2. Analyze what distinguishes liquidated damages from punitive damages and discuss whether or not the penalty be assessed in the above case.
Info Request
1. Liquidated damages are contractually agreed upon damages made in the advance of a breach of a contract to replace damages that would normally be claimed in litigation. As long as they represent a reasonable amount for the harm suffered, then they are legitimate.2. Liquidated damages are agreed upon by both contract members, punitive damages are requested in a law suit and imposed by a court (or jury) if appropriate.There39s no real penalty in the above case. Willard is liable for the full 10k, and Carnack can keep the amount. Willard sold the house for a 5k profit, so he only lost 5k anyway, but more importantly since he agreed to the terms of the contract, he is liable for the liquidated damages amount.

Answer by Matt D. (Purchased 4 times and rated )