Drew contracts to sell a residential duplex to Evan.The contract pro?vides that if Drew does not close the deal by September 15,he must pay Evan one-half of the contract price.This provision is not enforceable be?cause it is
A)a liquidated damages clause.
B)a mitigation clause.
C)a nominal damages clause.
D)a penalty clause.

Question

Quizplus · Accepted Answer

The provision in the contract stating that Drew must pay Evan one-half of the contract price if he fails to close the deal by September 15 is a penalty clause. Penalty clauses are not enforceable because they penalize a party for failing to perform instead of compensating the other party for actual damages incurred.

Drew Contracts to Sell a Residential Duplex to Evan