Jones Ordered a New Car and Was Required to Pay

question 122

Multiple Choice

Jones ordered a new car and was required to pay a $500 deposit. Which of the following is correct with respect to that deposit?

• A) If the court feels that the damages exceed the deposit, they will order the breaching party to pay any difference.
• B) A down-payment is an amount of money to be forfeited if either party is in breach of contract.
• C) The deposit must be a fair reflection of the loss actually suffered.
• D) The deposit must be an honest attempt by the parties to pre-estimate damages in the event of a breach.
• E) If no deposit had been paid, there could be no contract.

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Definitions:

Unconscionable

A term applied to a contract in which one party has so much more bargaining power than the other party that the powerful party dictates the terms of the agreement and eliminates the other party’s free will.

Constructive Trust

An equitable trust imposed on a person who wrongfully obtains or holds legal right to property he or she should not possess.

Equitable Trust

A fiduciary relationship wherein one party, known as the trustee, holds assets for the benefit of another party, the beneficiary, according to equitable principles of fairness.

Implied-In-Fact

A contract formed by non-verbal conduct, rather than explicit words, indicating that both parties intend to be bounded.