Henry and Xavier Are Merchants Under the UCC and Are

Multiple Choice

Henry and Xavier are merchants under the UCC and are determining what should be included in their liquidated damages clauses. Xavier wants to include punitive damages as part of their contract. What is the UCC rule regarding punitive damages?

A) That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 20 percent of the purchase price or $500, whichever is less, as punitive damages.
B) That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 20 percent of the purchase price or $500, whichever is more, as punitive damages.
C) That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 30 percent of the purchase price or $1,000, whichever is less, as punitive damages.
D) That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 30 percent of the purchase price or $1,000, whichever is more, as punitive damages.
E) The UCC does not address punitive damages, other than voiding liquidated damages that are punitive in nature.