Adams Signed a Contract in Which He Promised to Sell

question 16

Multiple Choice

Adams signed a contract in which he promised to sell his house to Jefferson for $225,000. The deposit to be paid was set at $4000, and the liquidated damages clause provided that the deposit would be forfeited in the event that the buyer breached the contract. The buyer did breach the contract. Because the cost of housing was falling, it was difficult, even after a reasonable time had passed, to find a new buyer. The highest offer was $218,000. Adams accepted. Which of the following is true with regard to Adams' remedies?

• A) He would be entitled to damages for money lost-$7000 plus selling costs.
• B) He would be entitled to the $4000 only, if the court held that the deposit was an honest attempt of the parties to estimate damages.
• C) He could sue for an injunction to stop Jefferson from buying another house.
• D) He could ask the court to order an accounting.
• E) Adams must sue for specific performance, which is the only remedy, an equitable remedy, available to the parties in land transactions.

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Definitions:

Fixed Manufacturing Overhead

Regular, consistent expenses that do not vary with production levels, such as salaries of supervisors and rent for factory facilities.

Financial Advantage

The benefit obtained from making specific financial decisions or investments, often measured in terms of profit, savings, or a more favorable financial position.

Variable Costs

Expenses that change in proportion to the business activity level.

Financial Advantage

The benefit gained in financial terms, likely leading to improved profitability or reduced expenses.