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3 June, 03:19

Metro Facilities, Inc., contracts to sell a parking lot to Nouveau Property Company. The contract provides that if Metro does not close the deal by September 15, it must pay Nouveau one-half of the contract price. This provision is not enforceable because it is

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  1. 3 June, 04:51
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    A penalty clause is a correct answer to this question.

    Explanation:

    A penalty clause differs from a clause on liquidated damages by not being tied to an estimate of potential actual damages. A provision stipulating an excessive monetary fee against a principal debtor in an agreement.

    Courts usually do not impose such a provision, but may impose liquidated liability provisions when they provide a reasonable estimate of real damages. So penalty clause is the right answer.
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