Dear Mike,
I have encountered few questions whilst trying BPP exam kit questions.
It would be great if you can have a look at them.
1. It said that 'rescission must take place before the contract is affirmed.' What does it mean when it says the contract is affirmed?
2. What is the difference between damages and compensations?
3. What is the difference between liquidated damages and penalty clauses apart from the fact that penalty clause is not enforceable?
Thank you very much for your help!
Ask the Tutor ACCA LW
BPP exam kit
9y ago#1It means before the contract is acted upon as though it were a valid contract
If you're looking to rescind, but you have already been actively or passively a party to actions subsequent to the agreement being made, then you have affirmed that contract ... so now it's too late to rescind
Damages is an award that is granted to the injured party in a breach of contract situation
The measurement of damages is essentially based on the amount necessary to compensate that injured party and, in that respect, I can't distinguish damages from compensation ... sorry!
Liquidated damages represent a genuine pre-agreement attempt to quantify the extent that either injured party is likely to suffer in the event of breach. The emphasis here is that it should be a GENUINE attempt to assess those potential damages suffered and should not simply be a round figure - that would be classed as penalties
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