In Which of the Following Cases Will a Court Refuse

question 18

Multiple Choice

In which of the following cases will a court refuse to enforce the provision of liquidated damages on a party?

• A)When the actual damages are difficult to determine
• B)When the liquidated damages were established prior to the breach of contract
• C)When the amount of liquidated damages fixed by the contract is unreasonable
• D)When the parties refuse to pay the liquidated damages established in the contract

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Definitions:

Price Decline

Price decline refers to the decrease in the market price of a security or asset over a specific period.

Equal Magnitude

A term used to describe quantities or values that are the same in size, amount, or degree.

Pure Yield Pickup Swap

A strategy where an investor moves into higher-yielding securities, trading off shorter-duration or lower-quality bonds for higher yield, assuming additional risk.

Longer-Duration Bonds

Fixed-income securities with extended time frames to maturity, typically exposing investors to higher interest rate risk but potentially offering higher yields.