A
liquidated damages provision stipulates that a predetermined amount of compensation shall be owed by a party who is in breach of a particular obligation to the other party.
Although not required for enforceability that a
liquidated damages clause explain in its own language what it is that makes the damages so difficult to calculate, it is required that the damages actually be difficult to calculate at the time the parties execute the lease.
Commercial factors play a part, and the agreement of a
liquidated damages sum may well be the product of negotiation or be reflective of the parties' agreement as to risk allocation.
The duty to mitigate damages, therefore, impacts the amount of avoidable costs that a firm may be able to use to justify the
liquidated damages clause-75% in the authors' prior example.
Where the parties to an agreement, whatever may be the subject-matter or the terms, have added a provision for the payment, in case of a breach, of a certain sum which is truly
liquidated damages and not a penalty--in other words, where the contract stipulates for one of two things in the alternative, the performance of certain acts, or the payment of a certain amount of money in lieu thereof--equity will not interfere to decree a specific performance of the first alternative, but will leave the injured party to his legal remedy of recovering the money specified in the second.
(43) Some courts have also, or alternately, required that the
liquidated damages not be substantially different from the actual loss, measured subsequent to the breach.
I recommend replacing the current system of punitive relief under Title VII with an approach similar to the damages provisions under the ADEA and FLSA, which currently provide for
liquidated damages. (229) Under the
liquidated damages scheme, an employer could be liable for "double damages" of the actual damages suffered by the plaintiff.
(7) The contract contained a
liquidated damages clause providing that if the contractor failed to complete the project on time, then the government would be entitled to damages in the amount of either $4,351 or $200 per day (depending up the line item number) for each day of delay.
so long as
liquidated damages are subject to the rule against penalties,
A well-drafted
liquidated damages clause can provide an employer with an added layer of protection in fighting to protect its customer base.
Construction contracts may call for "
liquidated damages" in the event of a delay in completion.
Liquidated damages provisions in leases: Property owners and managers should focus their attention on risks associated with improperly drafted late fee provisions in their leases.
