Another advantage is that a liquidated damages clause lets both parties settle on a sum that they can mutually agree upon, rather than leaving the decision up to the courts in costly litigation.
You don't have to be a celebrity like Justin Bieber to use a liquidated damages provision.
But if you have questions about whether a liquidated damages clause is valid, you may want to consult an experienced contracts lawyer near you.
Cash compensation, agreed to by signed, written contract for breach of contract, payable to the aggrieved party.
If you're signing a contract, it may contain a liquidated damages clause. It's not just social media pariahs like Amy's Baking Company who have to deal with liquidated damages in contracts.
More often than not, contracts that involve the exchange of money or the promise of performance have a liquidated damages stipulation.
But depending on how a liquidated damages clause is written, it can potentially be challenged in court.In Case of Contract Breach A liquidated damages clause sets an amount in a contract in the event of a breach.Think of it as "contract performance insurance." A liquidated damages clause isn't a penalty, though it may sound like one.A penalty is usually disproportionate to the actual harm, and is meant to punish or deter breaching a contract.Liquidated damages, however, serve as protection for People like to include liquidated damage clauses in contracts because they establish predictability involving costs.It lets two parties balance the cost of anticipated performance against the cost of a breach -- just like how limited insurance works.