Today's short vlog entry is about liquidated damages versus penalties, an issue that comes up both in drafting agreements and in litigation. Liquidated damages clauses allow a non-breaching party to an agreement recover a specific, negotiated amount from a breaching party. But if the amount is not reasonably related to the non-breaching party's prospective loss, a Court will determine the clause is penalty and it will not be enforced.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
