Joe Kunz agrees to buy a computer from Alf Singer for $3,000, by paying six installments of $500 each. Joe gave Alf $500 as a down payment but then backs out of the deal. Alf's loss of profit will be $1,500. Which of the following statements is TRUE?
A)Joe is entitled to get the $500 back.
B)Alf is entitled to keep the $500and sue for the balance of the lost profit.
C)Alf is entitled to keep the $500, but cannot sue for the balance.
D)Under no circumstances can Joe ever get the down payment back.
E)Alf is entitled to keep the $500 and sue for all of his lost profit.

Question

Quizplus · Accepted Answer

Alf is entitled to keep the $500 as liquidated damages for Joe backing out of the deal, but he cannot sue for the balance of the lost profit unless the contract specifically allows for additional damages beyond the down payment.

Joe Kunz Agrees to Buy a Computer from Alf Singer