Question: What is the difference between liquidated damages and punitive damages?

Options:

1. Liquidated damages are predetermined, while punitive damages are meant to punish
2. Liquidated damages are awarded for emotional distress, while punitive damages are for economic loss
3. Liquidated damages are only available in tort cases, while punitive damages are available in contract cases
4. There is no difference

Correct Answer: Liquidated damages are predetermined, while punitive damages are meant to punish

Solution:

Liquidated damages are predetermined amounts specified in the contract, while punitive damages are meant to punish the breaching party.