Reasonable liquidated damages clause

Reference no: EM133681802

Question

Jill agreed to build a house for Sam. The contract price of the house was $300,000 and it was to be completed by October 31st. Sam wanted to ensure that the house would be completed on time and was concerned that if it were not, he would be unable to calculate how much he lost from the delay. At the time of the contract, Sam and Jill agreed to include a liquidated damages clause.

Review Chapter 18 and the AJM Materials relating to liquidated damages and then write a paragraph or two that answer the following:

1. What are liquidated damages and when are they allowed?

2. Write an example of a reasonable liquidated damages clause for the building contract.

3. Write an example of an unreasonable liquidated damages clause for the building contract.

4. Explain why the examples are reasonable/unreasonable.

Reference no: EM133681802

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