When a seller retains the right to keep the buyer's deposit in the event of a default, this is referred to as?

The concept of retaining the buyer's deposit in the event of a default is known as liquidated damages. This term refers to a predetermined amount of money that the seller is entitled to receive as compensation for the buyer's failure to fulfill the terms of the contract, specifically when the buyer defaults on the agreement. Liquidated damages are used to provide clarity and certainty to both parties regarding the consequences of a breach, and they serve to limit the potential disputes that may arise from such a default.

In real estate transactions, the deposit is often a significant amount, and the agreement allows the seller to retain that deposit instead of pursuing additional damages or litigation. This arrangement can be particularly beneficial in expediting resolutions and providing a measure of financial security for the seller, as it clearly outlines the consequences of a breach of contract.

This contractual provision contrasts with other options presented. For example, specific performance refers to a legal remedy that requires a party to carry out the terms of a contract rather than receiving a monetary compensation. Compensatory damages are aimed at compensating a party for losses incurred due to a breach, not necessarily involving pre-agreed amounts like liquidated damages. Restitution refers to restoring a party to its original position before a contract was made, which again