Liquidated Damages Clause

• Category: Leases - Contracts
• State: Multi-State
• Control #: US-CL-595-1
• Format: Word; Rich Text

Description

Examples of clauses regarding Liquidated Damages, for such breach, for property, by Tenant OR by Landlord. A buyer and seller of real estate will often include a liquidated damages provision in the purchase and sale agreement as a means for stipulating the amount of damages the seller will receive in the event of a breach of the agreement by the buyer. A Liquidated Damages Clause, also known as a Penalty Clause, is a contract provision that provides for a predetermined amount of money to be paid as compensation for a breach of contract. This predetermined amount is either a specific sum of money or a formula for determining an appropriate amount. The clause is typically used when the parties do not know in advance the actual damages that could arise from a breach of contract. This type of clause is typically included in construction contracts, employment contracts, and lease agreements. There are two types of Liquidated Damage Clauses: 1. Genuine Pre-Estimate of Damages: This clause is used when the parties can reasonably predict the potential damages that could arise from a breach of contract. This clause is used when the actual damages would be difficult to calculate or would be too hard to prove. 2. Penalty Clause: This clause is used when the intention of the parties is to impose a penalty on the breaching party. The damages stated in the clause are usually disproportionate to the actual damage caused by the breach. This type of clause is not enforceable in certain jurisdictions.

A Liquidated Damages Clause, also known as a Penalty Clause, is a contract provision that provides for a predetermined amount of money to be paid as compensation for a breach of contract. This predetermined amount is either a specific sum of money or a formula for determining an appropriate amount. The clause is typically used when the parties do not know in advance the actual damages that could arise from a breach of contract. This type of clause is typically included in construction contracts, employment contracts, and lease agreements. There are two types of Liquidated Damage Clauses: 1. Genuine Pre-Estimate of Damages: This clause is used when the parties can reasonably predict the potential damages that could arise from a breach of contract. This clause is used when the actual damages would be difficult to calculate or would be too hard to prove. 2. Penalty Clause: This clause is used when the intention of the parties is to impose a penalty on the breaching party. The damages stated in the clause are usually disproportionate to the actual damage caused by the breach. This type of clause is not enforceable in certain jurisdictions.