SealCoat Paving Enters into a Contract with Royal Golf

question 25

Multiple Choice

SealCoat Paving enters into a contract with Royal Golf & Tennis Club to provide surface material for Royal's tennis courts by April 1 for a tournament to begin May 1.The contract specifies an amount to be paid if the contract is breached.This is a liquidated damages clause if the amount is

• A)meant to pay for additional liquid sealant in the event of damage.
• B)a reasonable estimate of the loss on a breach.
• C)designed to penalize the breaching party.
• D)intended to quickly provide cash to the nonbreaching party.