Question: Based on Contract B law, please answer this question: Based on Contract B Law, please answer the question below. Model Inc. is a fashion model
Based on Contract B law, please answer this question:
Based on Contract B Law, please answer the question below. Model Inc. is a fashion model management company. Ron Runway and Model Inc. signed a contract under which Ron agreed to perform modeling work exclusively for Model Inc.'s clients for a period of one year. In exchange for Model Inc.'s services, Model Inc. was entitled to a commission equal to 10 percent of 'any and all gross monies or other consideration received" as a result of any modeling work Ron did during the term of the contract. The contract provided that the clients would remit all payments to Model Inc., which would, in turn, deduct its commissions and pay over the balance to Ron on a quarterly basis. Ron performed modeling work for Model Inc.'s clients for a period of 11 months, then began working with a different management agency in breach of the parties' contract. When Model Inc. learned of the breach, it terminated the contract, as it was entitled to do. It also refused to turn over any payments it had received from clients for work Ron had done in the months leading up to the termination. In retaining these funds, Model Inc. pointed to a clause in the contract that stated, "Runway hereby agrees that in the event he breaches this Contract or otherwise refuses to fulfill his obligations here under, Model Inc., may, at its sole election, retain as liquidated damages all funds then held or subsequently received by Model Inc. on runway's behalf." Ron argues that this clause is unenforceable as a penalty and claims Model Inc. is only entitled to retain any commissions or other actual damages it can prove it is owed. Model Inc. asserts that the clause is instead a valid liquidated damages clause, and it should be entitled to retain the full amount of the funds in its possession without the necessity of proof of damages. In your view, who has the better argument and why?
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