An employment contract may state the amount of liquidated damages to be paid if the contract is breached. Upon a party's breach, the other party will recover this amount of damages whether actual damages are more or less than the liquidated amount.
If the agreed-upon liquidated damage amount is unreasonable, the Court will hold the liquidated damage clause to be void as a penalty. If the Court declares the clause to be void, the employee would have to prove the actual damages.
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Florida's Supreme Court has held that liquidated damages equal to 10 percent of the contract price is not unreasonable and is enforceable. Other Florida Appellate Courts have approved liquidated damages as high as 18 percent of contract price.
Liquidating damages in a contract limits the time, cost and difficulty of proving or challenging actual damages and, equally importantly, provides the parties with valuable information to use in assessing their risks and in determining what actions to take during construction.
If your employer breaks your employment contract, you are entitled to what you should have received under its terms. Generally speaking, this means that your employer owes you money. Courts are reluctant to order one party to a contract to actually do what it said it would do (called "specific performance").
A court will be more likely to enforce a liquidated damages provision if the damages that will be incurred as a result of a breach of the contract are difficult to estimate when the contract is entered into. In certain situations, injuries are easy to prove.
In determining whether a liquidated damage provision is enforceable, a court will look at whether the amount of the liquidated damage is reasonable in light of either: (1) the anticipated loss at the time the contract was entered into; or (2) the actual damages caused by the breach.
Liquidated damages clauses are generally enforceable, but most courts will not enforce a liquidated damages provision if (1) it constitutes a penalty as opposed to a reasonable estimate of the actual damages likely to be incurred due to delay, or (2) the party benefitting from the liquidated damages clause is
A provision for liquidated damages will be regarded as valid, and not a penalty, when three conditions are met: (1) the damages to be anticipated from the breach are uncertain in amount or difficult to prove, (2) there was an intent by the parties to liquidate them in advance, and (3) the amount stipulated is a
Liquidated damages only apply when: The contract doesn't specifically quantify the injury or the amount of damages required. The contract structures damages to function as damages but not as a penalty. The amount of harm anticipated as a result of the breach of contract is reasonable.
Other than unconscionability, a liquidated damages clause is unenforceable in two circumstances: (1) if the damages flowing from a breach of the contract were easily ascertainable at the time of execution; or (2) if the damages fixed were conspicuously disproportionate to the probable losses.
Is Your Liquidated Damages Clause Lawful in California? In California, it is possible to enforce a liquidated damages clause. The amount agreed to at the time that you and the other party sign the contract must be a reasonable estimate of losses that may be suffered should they fail to perform.
