Detailed Answer
(b) Statement I is incorrect because a liquidated damages
provision is enforced if it is not punitive but amounts to a
reasonable estimate of what the loss will be in the event of a
breach of contract. If a reasonable estimate of the loss from a
breach of contract cannot be estimated with a reasonable degree
of certainty, the parties can agree on an amount, but still the
amount cannot be punitive. Statement II is correct because damages
that are excessive are viewed as punitive.