Multiple choice

Find correct explanation from following assertion and reason from code. Assertion (A) : Damages must be reasonable for breach of a contract. Reason (R) Because reasonable damages are agreed upon in a contract.

  1. Assertion (A) and Reason (R) are right.

  2. Assertion (A) and Reason are (R) wrong.

  3. Assertion (A) is right. Reason (R) is wrong

  4. Assertion (A) is wrong. Reason (R) is right.

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The assertion is correct - damages awarded for breach of contract must be reasonable and not punitive. However, the reason is wrong because damages are not typically 'agreed upon' in the contract. Contract damages are based on actual loss suffered (compensatory principle) and are determined by courts based on remoteness, certainty, and mitigation principles. Liquidated damages are pre-agreed, but general damages are assessed by courts at the time of breach.