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P contracts with Q to deliver possession of a house under construction within a period of six months; failing which he would pay the monthly rental of Q. The monthly rental payable by P for Q is in the nature of :
- a)Penalty
- b)Liquidated Damages
- c)Exemplary Damages
- d)Special Damages
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
P contracts with Q to deliver possession of a house under construction...
The amount fixed is considered to be a penalty if it is not base upon a reasonable calculation of actual loss but is fixed by way of punishment and as a threat.
When the amount is fixed by the parties on the basis of a reasonable estimate of the probable actual loss which a party will suffer in case of breach is known as Liquidated Damages.
In above example the amount is fixed by both the parties and therefore the correct answer is Liquidated Damages.
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P contracts with Q to deliver possession of a house under construction...
Explanation:
The monthly rental payable by P for Q is in the nature of liquidated damages.
What are Liquidated Damages?
Liquidated damages are a pre-estimated amount that the parties agree to in advance as compensation in the event of a breach of contract. It is a fixed amount or a formula that is agreed upon by the parties at the time of contract formation. Liquidated damages are a way to avoid litigation and settle disputes more efficiently.
Why is the monthly rental payable by P in the nature of Liquidated Damages?
In this scenario, P has contracted with Q to deliver possession of a house under construction within a period of six months. In case P fails to deliver possession within the specified time, he would pay the monthly rental of Q. The monthly rental amount is agreed upon by the parties in advance and is a pre-estimated amount that Q would incur in case of a breach of contract. Hence, the monthly rental payable by P is in the nature of liquidated damages.
Conclusion:
In conclusion, liquidated damages are a useful tool to avoid litigation and settle disputes more efficiently. In this scenario, the monthly rental payable by P for Q is in the nature of liquidated damages as it is a pre-estimated amount agreed upon by the parties in advance.
The monthly rental payable by P for Q is in the nature of liquidated damages.
What are Liquidated Damages?
Liquidated damages are a pre-estimated amount that the parties agree to in advance as compensation in the event of a breach of contract. It is a fixed amount or a formula that is agreed upon by the parties at the time of contract formation. Liquidated damages are a way to avoid litigation and settle disputes more efficiently.
Why is the monthly rental payable by P in the nature of Liquidated Damages?
In this scenario, P has contracted with Q to deliver possession of a house under construction within a period of six months. In case P fails to deliver possession within the specified time, he would pay the monthly rental of Q. The monthly rental amount is agreed upon by the parties in advance and is a pre-estimated amount that Q would incur in case of a breach of contract. Hence, the monthly rental payable by P is in the nature of liquidated damages.
Conclusion:
In conclusion, liquidated damages are a useful tool to avoid litigation and settle disputes more efficiently. In this scenario, the monthly rental payable by P for Q is in the nature of liquidated damages as it is a pre-estimated amount agreed upon by the parties in advance.
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P contracts with Q to deliver possession of a house under construction within a period of six months; failing which he would pay the monthly rental of Q. The monthly rental payable by P for Q is in the nature of :a)Penaltyb)Liquidated Damagesc)Exemplary Damagesd)Special DamagesCorrect answer is option 'B'. Can you explain this answer?
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P contracts with Q to deliver possession of a house under construction within a period of six months; failing which he would pay the monthly rental of Q. The monthly rental payable by P for Q is in the nature of :a)Penaltyb)Liquidated Damagesc)Exemplary Damagesd)Special DamagesCorrect answer is option 'B'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about P contracts with Q to deliver possession of a house under construction within a period of six months; failing which he would pay the monthly rental of Q. The monthly rental payable by P for Q is in the nature of :a)Penaltyb)Liquidated Damagesc)Exemplary Damagesd)Special DamagesCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for P contracts with Q to deliver possession of a house under construction within a period of six months; failing which he would pay the monthly rental of Q. The monthly rental payable by P for Q is in the nature of :a)Penaltyb)Liquidated Damagesc)Exemplary Damagesd)Special DamagesCorrect answer is option 'B'. Can you explain this answer?.
P contracts with Q to deliver possession of a house under construction within a period of six months; failing which he would pay the monthly rental of Q. The monthly rental payable by P for Q is in the nature of :a)Penaltyb)Liquidated Damagesc)Exemplary Damagesd)Special DamagesCorrect answer is option 'B'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about P contracts with Q to deliver possession of a house under construction within a period of six months; failing which he would pay the monthly rental of Q. The monthly rental payable by P for Q is in the nature of :a)Penaltyb)Liquidated Damagesc)Exemplary Damagesd)Special DamagesCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for P contracts with Q to deliver possession of a house under construction within a period of six months; failing which he would pay the monthly rental of Q. The monthly rental payable by P for Q is in the nature of :a)Penaltyb)Liquidated Damagesc)Exemplary Damagesd)Special DamagesCorrect answer is option 'B'. Can you explain this answer?.
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