Earthquake.Stewart,the owner of ABC Construction,agreed with Joan,the owner of XYZ Hotel,that he would complete renovations on her upscale hotel on the beach in Florida by October 1.The amount due to Stewart under the contract was $250,000.The contract contained a clause by which Stewart would pay Joan $50,000 for each day he was late on completing the project.Unfortunately,an unexpected strong earthquake shook the area,and while the earthquake did not damage the hotel itself,Stewart encountered significant difficulty in getting supplies due to the high demand for building material following the earthquake.Because he believed that traveling himself to other states to obtain supplies would be prohibitively expensive,he delayed the project for two weeks while waiting for local stores to have sufficient supplies available.Stewart finished renovations six days late.Joan told Stewart that she owed him nothing but that he owed her $50,000.Stewart told Joan that he was suing for the entire $250,000 because it was not his fault the earthquake delayed matters.Which of the following is the appropriate term for the agreement that Stewart would pay Joan $50,000 for each day he was late in completion?

Question

Quizplus · Accepted Answer

Typically,the court determines the amount of damages to which a nonbreaching party is entitled.Sometimes,however,the parties recognize that if there is a breach of contract,it will probably be somewhat difficult for the court to determine exactly what the damages are.To prevent a difficult court battle,the parties may specify in advance what the liquidated damages will be if there is a particular kind of breach.