Fran had a very rare, and therefore expensive, automobile that ...

[michelleunicorn]

Fran had a very rare, and therefore expensive, automobile that she wished to sell. Fran worried that if the first attempt at selling the auto failed, the value of the auto might come into question. To prevent any potential loss of profit if the auto needed to be resold, Fran created a sales contract that provided for an estimation of damages should the contract later be breached by the potential buyer. A potential buyer was found, and the contract was signed. Later, because of a lack of sufficient financing, the buyer breached the sales contract. Fran requested the estimated damages provided for in the contract. The buyer refused, calling the clause unconscionable and excessive. Can Fran recover?

Question 2

Debra Montrose is on active military duty in Afghanistan when she is notified by her parents that she has received a foreclosure notice on her home. Which of the following is true?
 A)The foreclosure can proceed if she entered into the mortgage when she was not on active military duty.
 B)The foreclosure can proceed but there can be no deficiency judgment.
 C)The foreclosure cannot proceed while she is on active military duty.
 D)The foreclosure can proceed as long as she does not have a VA or FHA loan.

[Ahnyah]

Answer to Question 1

Fran can recover from the buyer's breach. Parties to a sales contract may seek to limit or exclude the recovery of damages in case of a breach. The estimated losses agreed to by the parties would be termed a liquidated damages clause. Such a clause is valid if the losses would be difficult to prove and alternative remedies would not be adequate under the circumstances. If the amount requested under the contract was reasonable in light of the situation, it is valid.

Answer to Question 2

A