By David McCarthy
A clause in a real estate contract that gives seller an option to recover liquidated damages or actual damages is unenforceable for violating public policy.
An "option" of that kind distorts the purpose of liquidated damages, i.e., to pre-arrange settlement for a sum certain when actual damages would be hard to determine, and subjects buyers to a penalty when liquidated damages exceed actual damages. (Catholic Charities etc. v. Thorpe No. 1-99-1717).
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