A contractor and Southampton, Inc.have a contract, which calls for the contractor to build a building with the completion by June 15.If the building is not completed by that date, the contract calls for the contractor to pay $100 per day in damages.The $100 per day is:
A) liquidated damages.
B) an illegal penalty.
C) punitive damages.
D) nominal damages.

Question

Quizplus · Accepted Answer

Liquidated damages are a predetermined amount of money that a party agrees to pay as compensation if they breach a contract. In this case, the $100 per day for not completing the building by the specified date is an example of liquidated damages, as it is an agreed-upon sum to be paid for non-compliance with the contract terms.

A Contractor and Southampton, Inc