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Asked by Braden Shamray on Jul 21, 2024

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Metro Holdings Inc. contracts to sell a commercial parking garage to New Property LLC. The contract provides that if Metro does not close the deal by a certain date, it must pay the buyer one-half of the value of the property. This provision is not enforceable if it is

A) meant to pay for additional work in the event of damage.
B) a reasonable estimate of the loss on the breach.
C) designed to penalize Metro.
D) intended to quickly provide cash to New Property.

Penalize

To subject an individual or entity to a disadvantage or punishment for violations of laws, rules, or contracts.

Not Enforceable

Describes a contract or legal obligation that cannot be legally imposed or compelled by law due to issues such as illegality or lack of proper form.

Commercial Parking Garage

A facility designed to provide parking space for vehicles on a fee-paying basis, often found in urban areas.

  • Discern the validity and limitations of stipulations within a contract, notably liquidated damages clauses and exclusive remedy clauses.
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Verified Answer

LM
Lebogang MongaleJul 26, 2024
Final Answer :
C
Explanation :
This provision is considered a penalty clause, which is generally not enforceable in contracts. Penalty clauses are meant to punish the breaching party rather than to compensate the non-breaching party for losses incurred due to the breach.

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