Munchable Catering Company Contractually Agreed to Cater Indira's Wedding for a Price

Multiple Choice

Munchable Catering Company contractually agreed to cater Indira's wedding for a price of $25 000.Because Indira was anxious for everything to go just right on her wedding day,she insisted that the agreement contain a clause that said that,if Munchable breached the contract,it would be required to pay damages of $250 000.Tarik,the owner-operator of Munchables,agreed to the insertion of that clause because he was (1) new to the business,(2) very confident that he would perform exactly as required,and (3) easily persuaded.Two weeks before the wedding,however,disaster struck.Tarik was hospitalized with a mysterious illness.He immediately called Indira and explained that he would not be able to fulfill the contract.Indira became hysterical and demanded payment of $250 000.She eventually calmed down and was able to hire a replacement caterer at a price of $35 000.The wedding then occurred precisely as Indira had long hoped.She nevertheless still wants to sue Tarik for as much money as possible.Which of the following statements is most likely to be TRUE if a judge decides the case?

A) If Indira paid $25 000 to Tarik at the outset,she is now entitled to receive $35 000.
B) Indira is entitled to receive $250 000 from Tarik.
C) Tarik merely has to repay $25 000 to Indira.
D) Tarik is liable for punitive damages.
E) The judge will classify the contractual clause that requires the payment of $250 000 as a nominal damages clause.