Champion School of Real Estate - Law of Contracts Questions With Complete Solutions

Default of contract and types of damages correct answer: -In the event of default by the buyer, the seller may have several options, which include: -Liquidated damages. The seller can choose to accept the buyer's earnest money as liquidated damages, releasing all parties from any further obligation under the contract. Liquidated damages are damages that are established in the contract. -Monetary damages. In addition to specific performance, the injured party may "seek such other relief as may be provided by law." This would be an award of monetary damages by the court. Because monetary damages are awarded by the court, one never knows what they will be until the court rules. -Punitive and compensatory damages must be pursued in court. Punitive damages punish the default- ing party, and compensatory damages are set to cover the actual injury or economic loss. Leases and "right of first refusal" correct answer: Some residential leases contain a right of first refusal, giving the tenant the right to purchase the leased property by matching or bettering any offer before the property will be sold to someone else. Default remedies and their results correct answer: -Liquidated damages. The seller can choose to accept the buyer's earnest money as liquidated damages, releasing all parties from any further obligation under the contract. Liquidated damages are damages that are established in the contract. -Monetary damages. In addition to specific performance, the injured party may "seek such other relief as may be provided by law." This would be an award of monetary damages by the court. Because monetary damages are awarded by the court, one never knows what they will be until the court rules. -Specific performance. The injured party files a court action seeking an order of the court directing the defaulting party to