Liquidated Damages Must Be Directly Related to the Breach of Contract

question 68

True/False

Liquidated damages must be directly related to the breach of contract for which they are compensating the non-breaching party.

---

Definitions:

Debt Adjustment

involves the reorganization of a debtor's outstanding obligations through negotiation or a formal plan to repay debts over time or reduce the total amount owed.

Chapter 9

refers to a chapter of the United States Bankruptcy Code, providing for the reorganization of municipalities (like cities and towns).

Solvent

The state of having assets in excess of liabilities; able to pay all debts.

Involuntary Petition

A legal process initiated by creditors requesting the bankruptcy court to declare a debtor as bankrupt.