http://w w w .

jrank

10

1451

Search content... Search

Other Free Encyclopedias Law Library - American Law and Legal Information Free Legal Encyclopedia: Legislative Veto to Lloyd's

Liquidated Damages

contract breach parties penalty clauses actual amount courts

Ads by Google Arbitration Law Improve your career in Arbitration. Study a CIArb & RICS online degree. www.RGU.ac.uk/ABS LLM Law Masters Study Law at Quality London School Get LLM Degree, Full- or Part-Time www.LSBF.org.uk/LLM Event Management Pros Award winning events specialists Year End functions, events, promos www.prworx.co.za Construction Law Courses Distance Learning courses with intensive Tutor Support. www.sobe.salford.ac.uk/courses

Related Articles
In makhachkala rashid nurgaliyev took part in the meeting dedicated to the results of work of the moi for the republic of dagestan. MOSCOW, Russia -- The following information was released by the Ministry of Interior of the Russian Federation: General of the Army Rashid Nurgaliyev, Minister of the Interior of the Russian Research Data from University of Iowa Update Understanding of Law Reviews. "Prepayment premiums fees lenders charge to borrowers in consideration for prepaying a loan before its maturity are not new, but a recent influential decision has prompted new considerations regarding VIEWPOINT: Set a Plan to Avoid Title II Receivership.(Bank Think)(Viewpoint essay)

Byline: Robert P. Simons and Luke A. Sizemore Under the new insolvency regime created by Title II of the Dodd-Frank Act, the Federal Deposit Insurance Corp. may be appointed as receiver of any failing Us labor department secures court ruling requiring texas-based henry's turkey service to pay $1.76 million to workers at iowa processing plant. DES MOINES, Iowa -- The following information was released by the U.S. Department of Labor: The U.S. Department of Labor has obtained a partial summary judgment requiring Hill Country Farms, doing

Monetary compensation for a loss, detriment, or injury to a person or a person's rights or property, awarded by a court judgment or by a contract stipulation regarding breach of contract. Generally, contracts that involve the exchange of money or the promise of performance have a liquidated damages stipulation. The purpose of this stipulation is to establish a predetermined sum that must be paid if a party fails to perform as promised. Damages can be liquidated in a contract only if (1) the injury is either "uncertain" or "difficult to quantify"; (2) the amount is reasonable and considers the actual or anticipated harm caused by the contract breach, the difficulty of proving the loss, and the difficulty of finding another, adequate remedy; and (3) the damages are structured to function as damages, not as a penalty. If these criteria are not met, a liquidated damages clause will be void. The American Law Reports annotation on liquidated damages states, "Damages for breach by either party may be liquidated in the agreement but only at an amount that is reasonable in light of the anticipated or actual harm caused by the breach. A term fixing unreasonably large liquidated damages is unenforceable on grounds of public policy as a penalty" (12 A.L.R. 4th 891, 899). A penalty is a sum that is disproportionate to the actual harm. It serves as a punishment or as a deterrent against the breach of a contract. Penalties are granted when it is found that the stipulations of a contract have not been met. For example, a builder who does not meet his or her schedule may have to pay a penalty. Liquidated damages, on the other hand, are an amount estimated to equal the extent of injury that may occur if the

contract is breached. These damages are determined when a contract is drawn up, and serve as protection for both parties that have entered the contract, whether they are a buyer and a seller, an employer and an employee or other similar parties. Ads by Google Arbitration Law Improve your career in Arbitration. Study a CIArb & RICS online degree. www.RGU.ac.uk/ABS Law Masters, London LLM in International Business Law Central Location, Expert Tuition www.LSBF.org.uk/LLM Event Management Pros Award winning events specialists Year End functions, events, promos www.prworx.co.za Legal English Institute Legal English for Lawyers, Students American University Law in D.C. www.wcl.american.edu/SLEI The principle of requiring payments to represent damages rather than penalties goes back to the EQUITY courts, where its purpose was to protect parties from making
UNCONSCIONABLE bargains or overreaching

their boundaries. Today section 2-718(1)

of the UNIFORM COMMERCIAL CODE deals with the difference between a valid liquidated damages clause and an invalid penalty clause. Liquidated damages clauses possess several contractual advantages. First, they establish some predictability involving costs, so that parties can balance the cost of anticipated performance against the cost of a breach. In this way liquidated damages serve as a source of limited insurance for both parties. Another contractual advantage of liquidated damages clauses is that the parties each have the opportunity to settle on a sum that is mutually agreeable, rather than leaving that decision up to the courts and adding the costs of time and legal fees.

Liquidated damages clauses are commonly used in real estate contracts. For buyers, liquidated damage clauses limit their loss if they default. For sellers, they provide a preset amount, usually the buyer's deposit money, in a timely manner if the buyer defaults. The use and enforcement of liquidated damages clauses have changed over the years. For example, cases such as Colonial at Lynnfield v. Sloan, 870 F.2d 761 (1st Cir. 1989), and Shapiro v. Grinspoon, 27 Mass. App. Ct. 596, 541 N. E. 2d 359, 1989), have granted courts permission to compare the amount set forth in the liquidated damages provision against the actual damages caused by a breach of contract. These "second-look" rulings have led several courts to honor the liquidated damages clauses only if they are equal to, or almost equal to, the actual damages. FURTHER READINGS Brizzee, David. 1991. "Liquidated Damages and the Penalty Rule: A Reassessment." Brigham Young University Law Review 1991. Calamari, John D., and Joseph M. Perillo. 1987. Contracts. 3d ed. St. Paul, Minn.: West. Daniszewski, Robert M., and Jeffrey W. Sacks. 1990. "One View Too Many." Boston Bar Journal 34 (April). Ads by Google Construction Law Courses Distance Learning courses with intensive Tutor Support. www.sobe.salford.ac.uk/courses Novak Druce Quigg LLP NDQ attorneys are focused exclusively on complex IP matters. www.novakdruce.com International Arbitration Dr.iuris Jan Havlicek, professional arbitrator for internat.arbitration www.janhavlicek.com

Labor Contract complete solutions for human resource documents readyhrdocs.com

liquidated damages [next] [back] Liquidate

Citing this material

Please include a link to this page if you have found this material useful for research or writing a related article. Content on this website is from high-quality, licensed material originally published in print form. You can always be sure you're reading unbiased, factual, and accurate information. Highlight the text below, right-click, and select copy. Paste the link into your website, email, or any other HTML document.
<a href="http://law .jrank.org/pag

User Comments
Name Email
Your email address will be altered so spam harvesting bots can't read it easily. Hide my email completely instead?

Body

Save changes

Cancel or
Copyright 2011 Net Industries and its Licensors All Rights Reserved Terms of Use

Read more: Liquidated Damages - Contract, Breach, Parties, Penalty, Clauses, and Actual http://law.jrank.org/pages/8310/Liquidated-Damages.html#ixzz1MhgC1wQB