Question

Copper Conduit, Inc., and Dependable Electric Company sign an agreement that provides for the payment of "$1,000 by whichever party commits a material breach of the contract that creates damages difficult to estimate but approximately $1,000." This is​:______________________.
a) ​a liquidated damages clause.
b) ​a mitigation-of-damages clause.
c) ​a waiver-of-breach clause.
d) ​a penalty clause.

Answer 1

Answer:

A) ​a liquidated damages clause.

Explanation:

In contract law, a liquidated damages clause establishes a specified amount of money set as damages in case any of the parties involved breach a contract.

The specified amount of money should be an estimate of the damages that a breach in the contract would cause.