Question
A homeowner agreed to buy a neighbors car for the fair market value of $16,000. The two-year-old car was a popular make and model in
A homeowner agreed to buy a neighbors car for the fair market value of $16,000. The two-year-old car was a popular make and model in excellent condition. The contract specified that, if for any reason the homeowner failed to pay the full $16,000 on the agreed date of the sale, the homeowner would owe the neighbor $16,000 as liquidated damages. The homeowner was subsequently laid off and was unable to purchase the car on the date of the sale. The neighbor immediately sued the homeowner for breach of contract, seeking $16,000 in liquidated damages.
Is the court likely to enforce the liquidated damages provision of the contract?
a) Yes, because $16,000 was the contract price, and thus the amount that the neighbour lost in expectation interest as a result of the homeowners breach.
b) No, because the neighbour would be able to sell the car to another buyer if the neighbour desired to do so, making the amount of the neighbours actual loss lower than $16,000. (Should be this)
Pls provide the answer with an explanation!
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