Brianna Contractually Agreed to Sell a Widget to Oren

question 48

Multiple Choice

Brianna contractually agreed to sell a widget to Oren. She was required to deliver the item on June 1 and he was required to pay $75 000 on the same day. Paragraph 21 of the contract said that if Brianna breached the contract by refusing to deliver the item, Oren would be entitled to a payment of $20 000. Brianna did, in fact, refuse to deliver the widget. Oren therefore has not yet paid the price. Which of the following statements is TRUE?

• A) If Oren suffered a loss of $10 000 as a result of Brianna's breach, he will be entitled to payment of $20 000 if paragraph 21 of the contract was a penalty.
• B) If Oren suffered a loss of $10 000 as a result of Brianna's breach, he will be entitled to payment of that amount and no more if paragraph 21 of the contract was for liquidated damages.
• C) If Oren suffered a loss of $20 000, and the court classified paragraph 21 as liquidated damages, then Brianna would be liable to pay $95 000.
• D) If Oren suffered a loss of $30 000 as a result of Brianna's breach, he will be entitled to payment of that amount if paragraph 21 of the contract was for liquidated damages.
• E) If Oren suffered a loss of $15 000 as a result of Brianna's breach, he will be entitled to payment of that amount if paragraph 21 of the contract was a penalty.

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