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:

Time Of Payment

The specific date or schedule agreed upon for payment to be made in a transaction.

Bearer Instrument

A type of negotiable financial instrument that entails payment to whoever holds the document, without requiring the transfer to be recorded, distinguishing it from other securities which are registered to specific owners.

Payable

Refers to an amount of money that is owed by a person or company to a creditor, typically categorized in financial statements as current liabilities.

Possesses

The act of having physical control or ownership of something, indicating a legal relationship between a person and the object being possessed.