Liquidated Damages Enforceability

Liquidated damages clauses set a pre-determined amount for breach. Courts enforce them only when they represent a reasonable estimate of actual harm, not a penalty. Enter your clause parameters to assess enforceability.

Contract value ($)

Liquidated damages amount ($)

Which factors apply? (check all that are true)

Damages were hard to estimate at signing Amount is a reasonable estimate of actual harm Mutual — applies to both parties equally Both parties are sophisticated businesses Amount far exceeds likely actual harm Applies automatically regardless of actual harm Clause is labeled "penalty" in the contract Consumer contract (not B2B)