What is the exam-ready distinction?
| Roadmap post | 203 of 500 |
|---|---|
| Official syllabus topic | Contracts: Breach, Damages, and Equitable Remedies |
| Official PSI area | Contracts |
| Published weight | 19% of the 100-question national portion |
| Source edition | PSI Georgia Candidate Information Bulletin dated July 1, 2026 |
| Content checked through | August 2, 2026 |
The Rule
PSI publishes a weight for the complete official area, not a guaranteed count for this individual comparison. Use the source, document, actor, event, and timing stated in the question before applying a memorized definition.
Side-by-side comparison
Read across each row. The terms are deliberately compared on identical dimensions so the difference remains clear when the exam hides the vocabulary inside a scenario.
| Decision dimension | Liquidated damages | Specific performance |
|---|---|---|
| Remedy | Agreed monetary amount or formula for a covered breach | Court order requiring the promised performance |
| Why used | Actual damages were difficult to estimate when contracting | Money may be inadequate, often because land is unique |
| Validity limit | Must not operate as an unenforceable penalty | Equitable and discretionary, with contract and fairness defenses |
| Real estate clue | Earnest money retained under an enforceable remedy clause | Order to convey the identified parcel |
Decision rule
Georgia-specific distinction
Worked example
Scenario. A signed contract states that, after a covered buyer default, the seller may retain the earnest money as the seller's agreed exclusive remedy.
Reason it through. The clause specifies a money remedy and says it is exclusive. The facts do not request a court order compelling purchase.
Answer. The clause describes liquidated damages, subject to enforceability under the governing law.
Common exam traps
- Calling every forfeiture enforceable liquidated damages
- Assuming a seller always gets both remedies
- Treating specific performance as money damages
- Ignoring an exclusive-remedy or election clause
Original practice questions with detailed explanations
These are original instructional questions mapped to the July 1, 2026 PSI outline. They are not copied from PSI or any live examination. Choose an answer before opening the explanation.
Question 1Which remedy asks a court to compel conveyance of the contracted parcel?
- A. Liquidated damages
- B. Rescission
- C. Assignment
- D. Specific performance
Show answer and explanation →
Answer: D. Specific performance
Specific performance is correct. Liquidated damages are a contractually agreed money remedy intended to estimate loss, not punish breach. Specific performance is an equitable order compelling the promised act, such as conveying unique real property. Neither remedy is automatic, and the contract may make a remedy exclusive or subject it to an election. The remaining options, Liquidated damages; Rescission; Assignment, do not match the controlling category or fact.
Question 2A signed contract states that, after a covered buyer default, the seller may retain the earnest money as the seller's agreed exclusive remedy.
- A. The clause describes liquidated damages, subject to enforceability under the governing law.
- B. The seller automatically receives liquidated damages and specific performance.
- C. The clause is a novation.
- D. Specific performance means keeping the deposit.
Show answer and explanation →
Answer: A. The clause describes liquidated damages, subject to enforceability under the governing law.
The clause specifies a money remedy and says it is exclusive. The facts do not request a court order compelling purchase. The supported conclusion is: The clause describes liquidated damages, subject to enforceability under the governing law. The other choices replace those controlling facts with a neighboring concept or an unsupported absolute rule.
Question 3What should a candidate identify first when comparing Liquidated Damages Versus Specific Performance?
- A. The option with the longest definition, without classifying the facts.
- B. Ask whether the claimant seeks a predetermined money remedy or actual completion, then check enforceability, exclusivity, election, and equitable defenses.
- C. A memorized Georgia rule, even when the question asks for a national concept.
- D. The answer that sounds most favorable to one party, regardless of the document or event.
Show answer and explanation →
Answer: B. Ask whether the claimant seeks a predetermined money remedy or actual completion, then check enforceability, exclusivity, election, and equitable defenses.
Ask whether the claimant seeks a predetermined money remedy or actual completion, then check enforceability, exclusivity, election, and equitable defenses. That sequence identifies the legal category before the label. Definition length ignores the facts, jurisdiction confusion answers a different question, and sympathy cannot replace the document, event, calculation, or governing rule.
Mastery tracking
Mark this distinction mastered only when every statement is true.
- Define every compared term without using the other term as the definition.
- Rebuild the comparison table from memory.
- State the decision rule and Georgia distinction without notes.
- Solve the worked example after changing one controlling fact.
- Explain why every trap and distractor is tempting but wrong.
- Answer all three original questions correctly in mixed practice on a later day.
Recommended next lesson
Continue with Option Contract Versus Right of First Refusal. Continue to roadmap comparison 204.
Return to the complete exam-concept library or the Contracts hub.