Hawaii Pre-Licensing National Practice Exam

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Under a sales contract, the legal remedy that may be used to force the seller to consummate the sale is called:

Compensatory damages
Specific performance
Rescission
Liquidated damages

The correct answer is: Specific performance

The legal remedy referred to in the question is specific performance. This term denotes a court-mandated order requiring the seller to fulfill their obligations under the sales contract as originally agreed upon. Specific performance is typically utilized in real estate transactions because each piece of property is unique; thus, monetary damages may not adequately compensate the buyer for the seller's failure to perform. This remedy allows the buyer to obtain exactly what was promised in the contract rather than just financial compensation. While compensatory damages involve monetary awards to cover losses from a breach of contract, they do not compel the seller to complete the sale. Rescission allows for the cancellation of the contract but does not enforce its terms. Liquidated damages specify a predetermined amount to be paid if one party fails to meet the contractual obligations, but, like compensatory damages, they do not compel performance of the contract. Specific performance stands out as the appropriate legal remedy specifically aimed at ensuring the seller completes the transaction as per the terms of the contract.