A Liquidation of Damages Clause in a Consumer Contract Is

question 28

Multiple Choice

A liquidation of damages clause in a consumer contract is enforceable if it:

• A) is not in excess of twice the provable damages.
• B) is agreed to by both parties to the contract.
• C) reasonably attempts to estimate the actual harm caused by a breach.
• D) is a reasonable amount designed to punish the breaching party.

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Definitions:

Absorption Costing

A calculation technique in which the cost of a product is determined by including all costs associated with manufacturing, including direct materials, direct labor, as well as variable and fixed overhead costs.

Cost-plus Pricing

A pricing strategy where a fixed percentage is added to the total cost of producing a product to determine its selling price.

Return on Investment

A measure of performance that evaluates the efficiency or profitability of an investment relative to its cost.

Selling Price

The amount of money a buyer pays to purchase a product or service.