Chapter 20 Correct Assignment Answers

Chapter 20 Correct Assignment Answers - 2 She can recover...

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2. She can recover the $5,000. The value of a work of art cannot be determined exactly. Moreover, a work of art cannot be resold immediately when the buyer breaks the contract. A substantial period of time could elapse before the seller could make a resale. If a year would go by, the seller would have lost the use of $100,000 by that delay. At only 5 percent interest, that would mean the seller lost $5,000. In addition, certainty in the calculation of damages was made impossible by the fact that it could not be foreseen whether the painting would appreciate or depreciate between the breach and resale or whether there would be a change in tax law that would benefit or hurt the seller. Because of all these uncertainties, the liquidated damages clause was a reasonable attempt made to determine or fix the damages, and it was therefore valid. 4. The owner could recover $14,000 on the basis that much money would have to be spent in order to achieve the same position had there been no breach of contract. The owner cannot
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This note was uploaded on 02/29/2012 for the course BUSINESS 101 taught by Professor Monastersky during the Spring '10 term at Bergen Community College.

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