Question

Carl agrees to build a hotel for Jerry by December 1. Both parties agree that if Carl fails to meet his December 1 deadline, he would be obligated to pay $10,000 per day in damages beginning December 2 for each day it takes to finish the hotel past the December 1 deadline. The $10,000 per day damages represent:a. Specific Performanceb. Restitution.c. Liquidated Damages.d. Punitive Damages

Answer 1

Answer: liquidated damages

Explanation: In simple words, liquidated damages refers to the damages that the parties designate with each other while forming the contract. Under this clause, the guilty party will pay the suffering party a certain amount of compensation in case of not performing an activity as per the contract.

In the given case, Carl and Jerry had a contract that Carl will build the hotel in a certain period which he fails to perform.

Hence, Carl is liable to pay liquidated damages to Jerry.