Damages

Liquidated damages are sometimes written into a contract by the parties as a method for assessing damages in the event of a breach. The parties stipulate to the amount, or a formula to determine the amount in situations where precise damages would be difficult to ascertain. Liquidated damages provisions are permitted only where prospective damages are uncertain or very difficult to establish; if the parties simply made no attempt to determine the amount of possible damages, a liquidated damages provision may be unenforceable. In addition, a liquidated damages provision will be stricken as void if a court determines that it is in fact penal in nature.