Question

Fine properties, inc. , negotiates with general maintenance corporation to include a liquidated damages clause in their contract. To be enforceable, at the time of the contract, an estimate of the damages from a breach must be.

Answer 1

After negotiating with general maintenance corporation to include a liquidated damages clauses in their contract and to be enforceable, at the time of the contract, an estimate of the damages from a breach must be difficult.

What is a damage clause?

• A liquidated damages clause outlines a specific dollar sum that must be paid as compensation for breach of a contract.
• The parties' best estimate of the losses that would result from a violation at the time of contract signing is expected to be the amount of the liquidated damages.
• The parties do not determine the real damages in the event of a violation and the liquidated damages clause is upheld (i.e., how much money a party actually lost as a result of the breach).

The liquidated damages provision's predetermined amount is instead paid by the party who violated it. In addition to providing some predictability, they can serve as a form of insurance against the expense of a breach.

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