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:

Nonfinancial Businesses

Companies whose primary activities involve the production or supply of goods and services, rather than financial transactions and investments.

Real Asset(s)

Physical or tangible assets that have intrinsic value such as real estate, commodities, and natural resources.

Agency Problem

Conflicts of interest among stockholders, bondholders, and managers.

Shareholders

Individuals or entities that own shares in a corporation, thus having a claim on part of the company's assets and earnings.