Question

Metro Facilities, Inc., contracts to sell a parking garage to Nouveau Property Company. The contract provides that if Metro does not close the deal by September 15, it must pay Nouveau one-half of the contract price. This provision is NOT enforceable because it is:a. a liquidated damages clauseb. a waiver of breach clausec. a limitation-of-liability claused. a penalty clause

Answer 1

Answer:

D) a penalty clause

Explanation:

Penalty clauses are usually not enforced by the courts since they generate an excessive charge against the other party for defaulting or breaching a contract. Generally penalty clauses are considered excessive since they aren't proportional to the damages incurred.