7.4k views
4 votes
Which of the following is the best example of a situation where Segerstrom would be entitled to liquidated damages?

A. Sandoval entered into a contract with Segerstrom which stated that Sandoval was required to pay $25,000.00 to Segerstrom by March 22, 2023; however, Sandoval then failed to pay any money to Segerstrom.
B. Cruz entered into a contract with Segerstrom which stated that Cruz would refrain from exercising his legal right to smoke cigarettes; however, Cruz then smoked several cigarettes the next day.
C. Sotomayor entered into a contract with Segerstrom which stated that Sotomayor would pay $100,000.00 to Segerstrom in the event of a breach; however, Sotomayor then breached the contract.
D. Rios entered into a contract with Segerstrom which stated that Rios would sell his house to Segerstrom; however, Rios then got an offer of $100,000.00 more from Nguyen so Rios sold the house to Nguyen instead.

1 Answer

5 votes

Final answer:

The best example of an entitlement to liquidated damages is where a contract explicitly states the amount to be paid in the event of a breach, as in Option C where Sotomayor agreed to pay Segerstrom $100,000.00 if they breached the contract.

Step-by-step explanation:

The concept of liquidated damages refers to a predetermined amount of money that is stated in a contract as compensation in case of a breach of the contract. This amount is not a penalty, but an estimation of damages that would result from a breach, and it should be reasonable relative to the anticipated harm caused by such a breach.

The best example of a situation where Segerstrom would be entitled to liquidated damages is in Option C: Sotomayor entered into a contract with Segerstrom which stated that Sotomayor would pay $100,000.00 to Segerstrom in the event of a breach; however, Sotomayor then breached the contract. This scenario illustrates an explicit agreement on the amount to be paid in the event of a breach, which fits the definition of liquidated damages.

Options A, B, and D describe breaches of contract but do not specify if a liquidated damages clause is present. Without an agreed-upon, specified amount to be paid as damages, one cannot infer the right to liquidated damages from these options.

User YannicuLar
by
8.4k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.