Which of the following is a condition necessary for a liquidated damages agreement to be enforced?

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Which of the following is a condition necessary for a liquidated damages agreement to be enforced?

Multiple Choice

If actual damages would be difficult to prove in the event of a breach of the contract

If the amount is large enough to be considered penal

If the amount is considered unconscionable

If there is no breach of the contract agreed upon by both parties

2.

Which section of the UCC governs statute of limitations in contract disputes?

Multiple Choice

2-703

1-102

2-725

2-301

3.

Normally, a breach of warranty is considered to have occurred:

Multiple Choice

at the time the buyer should have discovered the defect in the good.

at the time the buyer actually discovered the defect in the good.

at the time of contract.

when the goods are delivered.

4.

If a seller who learns of the buyer’s breach decides to stop manufacturing the goods, she must:

Multiple Choice

sell the goods for their scrap or salvage value.

hold on to the goods for 14 days just in case the buyer changes his mind.

finish the manufacturing of the goods to prevent waste.

try to find a replacement buyer for the finished goods.

EXPERT ANSWER

Ans 1: If actual damages would be difficult to prove in the event of a breach of the contract

Explanation: Generally, reasonable liquidated damage clauses will be enforced when actual damages are difficult to determine.

Ans 2: 2-725

Explanation: 2-725 Statue of Limitations states that “An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued. By the original agreement, the parties may reduce the period of limitation to not less than one year but may not extend it.”

Ans 3: when the goods are delivered.

Explanation: A breach of contract occurs when the agreement is not kept because one party to the contract does not fulfill their obligation according to its terms.

Ans 4: sell the goods for their scrap or salvage value.

Explanation: When a buyer or lessee breaches or repudiates the contract while the seller or lessor is in possession of the goods, the seller or lessor can resell or dispose of the good