The Enforceability Of Liquidated Damages Clauses

Liquidated damages clauses can be present in contracts in which it states that there is an amount that will in effect be forfeited if one of the parties does not perform in a timely manner or if they breach the contract. The enforceability of a liquidated damages clause in a contract depends on its reasonableness relative to the harm suffered and the amount that will be lost must be difficult to calculate or determine. The liquidated damages that are viewed as penalties and are in excess of what should be awarded generally will not be upheld.

The following questions have been addressed in this article:

How could a liquidated damage clause avoid being struck down?
Does it matter that the liquidated damages clause appears in the preprinted form of the agreement?


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