Millennium Properties enter into a contract to purchase land from Oxford Management.Because Millennium wants to avoid the risk of a timely and complicated lawsuit in the case of a breach of contract,they input a clause stating the following,"If either party breaches their side of the agreement,the innocent party is entitled to $650,000." Following this,Oxford breaches the agreement and it costs Millennium $1.2 million.What action can Millennium take?

Question

Quizplus · Accepted Answer

Millennium is entitled only to $650,000 in liquidated damages as per the clause stated in the contract. The purpose of the clause is to avoid the risk of a time-consuming and complicated lawsuit, by fixing the amount of damages beforehand. The amount is considered reasonable based on the expectations of the parties when they entered into the contract. Therefore, Millennium cannot claim the full amount of damages, which exceeds the liquidated damages amount specified in the contract.

Millennium Properties Enter into a Contract to Purchase Land from Oxford