A Food Processing Plant Enters into a Contract with a Farmers

question 85

Multiple Choice

A food processing plant enters into a contract with a farmers' cooperative for the purchase of several thousand bushels of wheat at $6.50 per bushel to be delivered on November 15.The contract provides that there will be liquidated damages of $10,000 for each bushel of wheat that the cooperative fails to deliver.Which is true?

• A) Liquidated damages clauses are always valid if entered into before the actual breach.
• B) Because $10,000 is a relatively small amount,this liquidated damages clause is valid.
• C) This liquidated damages clause is invalid because it is excessive and because actual damages would be easy to compute if the wheat is not delivered.
• D) The liquidated damages clause would be reformed to $6.50 per undelivered bushel.

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Definitions:

Validity

The degree to which a test or measurement accurately reflects the concept or construct it is intended to assess.

Qualitative Methodology

A research strategy focusing on understanding and interpreting the meanings and experiences of research subjects through non-numeric data.

Statistical Tests

Procedures used in statistics to determine whether there is enough evidence in a set of data to infer that a certain condition is true for the entire population.

Dependent Variable

The variable being tested and measured in an experiment, which is expected to change as a result of manipulations of the independent variable.