[Hypothetical Narrative] After much recent career industry success, a local entrepreneur "Alpha" wished to sell his/her/their $3 million three-bedroom home in Santa Monica, California and purchase a new six-bedroom and guest house Berkeley estate costing $10 million. To sell his/her/their old house, Alpha entered into a residential real estate sales agreement (the Sales Agreement) with "Omega", a reasonably well-to-do novice in purchasing real estate.

Along with other language, the parties' signed, written contract contained the following language printed in a separate paragraph of large, bold type and separately initialed by Alpha and Omega (as required by state law):

IF EITHER PARTY BREACHES THIS AGREEMENT BY PREVENTING OR FAILING TO COMPLETE THE SALE/PURCHASE OF THE PROPERTY WITHOUT PROPER JUSTIFICATION OR EXCUSE UNDER THE TERMS OF THIS AGREEMENT, THE NON-BREACHING PARTY SHALL BE PAID THE SUM OF FIFTY THOUSAND AND NO/100 DOLLARS ($50,000.00).

Omega was so anxious to purchase Alpha's home, because, despite the recent general downturn of the Southern California real estate market, interest rates had been rising and homes north of Montana Avenue in Santa Monica had continued to appreciate in value; Omega was afraid of being priced out of the market.

Even so, at the time that Alpha and Omega executed the Sales Agreement, largely due to political uncertainties surrounding neighborhood preservation and Building Department refusals to grant building permits for large new Mini-Mansions (houses with thousands of square feet of space built close to the property lines) on smaller lots, there was uncertainty in the market for these Santa Monica homes. Therefore, it was extremely difficult, if not impossible, to predict what might happen to the marketability and/or sale price of Alpha's old home over the next year.

Nevertheless, most residential real estate agreements provided for forfeiture of the buyers initial deposit (frequently between one per cent (1%) and five per cent (5%) of the total sale price, if the buyer reneged on the sale without good cause.

Not more than a week after signing the Sales Agreement, Omega completely changed his mind, moving to frigid Greenland for his health. Omega gave Alpha notice of his intent not to complete the purchase of Alpha's Santa Monica home.

Based on Omega's clear breach of contract, Alpha [through his real estate agent] threatened Omega with legal action to collect his actual damages, which Alpha indicated would be at least $95,000.

[Scenario] Assuming that Alpha has an actual, provable loss of $95,000, will his damages for Omega's breach of contract be limited to $50,000:

Please explain, If so, by

(1) identifying the specific type of damages that the contract provides for Alpha; and

(2) cite specific facts from the Narrative, including compliance with the three elements necessary to make a contract clause for these damages enforceable, to explain why Alpha's damages are limited to $50,000, even if he actually suffers damages of $95,000 or more

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