Smith and Roberson's Business Law 16th Edition by Richard Mann,Barry Roberts

Exercise 11

Louis leased a building to Pam for five years at a rental of $1,000 per month, Pam depositing $10,000 as security for performance of all her promises in the lease, which was to be retained by Louis in case of any breach on Pam's part. Pam defaulted in the payment of rent for the last two months of the lease. Louis refused to return any of the deposit, claiming it as liquidated damages. Pam sued Louis to recover $8,000 (the $10,000 deposit less the amount of rent due Louis for the last wo months). What amount of damages should Pam be allowed to collect from Louis? Explain.