Asked by Patricia Garcia on May 08, 2024
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Henry and Xavier are merchants under the UCC and are determining what should be included in their liquidated damages clauses. Xavier wants to include punitive damages as part of their contract. What is the UCC rule regarding punitive damages?
A) That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 20 percent of the purchase price or $500, whichever is less, as punitive damages.
B) That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 20 percent of the purchase price or $500, whichever is more, as punitive damages.
C) That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 30 percent of the purchase price or $1,000, whichever is less, as punitive damages.
D) That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 30 percent of the purchase price or $1,000, whichever is more, as punitive damages.
E) The UCC does not address punitive damages, other than voiding liquidated damages that are punitive in nature.
Punitive Damages
Financial compensation awarded in a lawsuit intended to punish the defendant for egregious or malicious behavior, and deter similar conduct in the future.
Merchants
Individuals or businesses engaged in the trade of goods, services, or commodities for profit.
Liquidated Damages
A predetermined amount of money that must be paid as compensation for failure to perform under a contract.
- Comprehend the critical role liquidated damages play and the constraints imposed on their utilization in contract law.
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Learning Objectives
- Comprehend the critical role liquidated damages play and the constraints imposed on their utilization in contract law.
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