Which One of the Following Statements Accurately Describes the Effect

question 35

Multiple Choice

Which one of the following statements accurately describes the effect of a liquidated damages clause on a plaintiff's claim in a breach of contract action?

• A) This clause requires the injured party to take all reasonable steps to mitigate (lessen) his losses.
• B) The plaintiff will likely be awarded a judgment for all the damages that "naturally and directly flow" from the breach.
• C) This clause conclusively determines the amount of damages that the court can award.
• D) The court will likely award the amount set out in the clause if it considers that to be a genuine estimate by the parties of the likely consequences of the breach.
• E) Liquidated damages only apply to losses caused by excess water, such as floods or tidal waves.

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Definitions:

Real Wage

Wages adjusted for inflation, reflecting the actual purchasing power of income earned from labor.

Inflation

The tempo at which the aggregate cost of goods and services ascends, depleting the power of purchase.

Nominal Wage

Nominal Wage refers to the amount of money paid to workers in current dollars, without adjusting for inflation or purchasing power.

Real Wage

The purchasing power of an individual's earnings, considering inflation, reflecting the actual goods and services that wages can buy.