Which Statement Best Expresses the Position Taken by the Courts

question 38

Multiple Choice

Which statement best expresses the position taken by the courts with respect to contractual penalty clauses?

• A) The court will enforce if it is meant to scare the other party into timely performance.
• B) Such a clause is enforceable only if it fits the definition of a liquidated damages clause.
• C) Such clauses are always enforceable provided the other party has sufficient notice.
• D) Such clauses are enforceable provided they are in writing.

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Definitions:

Big Mac

A hamburger sold by McDonald's that is often used as an informal measure of purchasing power parity between currencies.

Depreciates

The decrease in value of an asset over time or in response to changes in market conditions.

Euro

The Euro is the official currency of the Eurozone, which consists of 19 of the 27 European Union member states, serving as one of the world's major currencies.

Real Exchange Rate

The rate at which two currencies can be exchanged after adjusting for their respective inflation rates.