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Question
Fact Pattern 18-1AAA Properties, Inc., leases an office building to Business Corporation (BC). At the time, the amount of damages on BC's default is difficult to determine, so the parties reasonably estimate, and the lease provides, that if BC defaults, AAA is entitled to $50,000 as "liquidated damages."
Refer to Fact Pattern 18-1. Suppose that the amount stipulated as "liquidated damages" is $1 million. Under the decision in Case 18.2, Green Park Inn, Inc. v. Moore, this amount is most likely
a. an unenforceable penalty because at the time of the lease, the amount of damages on default was too difficult to determine.
b. an unenforceable penalty because the amount is excessive.
c. liquidated damages because at the time of the lease, the amount of damages on default was difficult to determine and the estimate is reasonable.
d. liquidated damages because the lease refers to the amount as "liquidated damages."
Answer
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