When, from the nature of the case, and the tenor of the agreement, it is clear, that the damages have been the subject of actual and fair calculation and adjustment between the parties. Attorneys who draft restrictive covenant agreements can provide their clients with a more effective - and efficient - remedy by being aware of the law concerning liquidated damages clauses provision -- here, triggered by breaches of a non-compete clause in the sale of two vessels -- constitutes only the third time the Fifth Circuit has addressed this enforceability issue under maritime law.If these criteria are not met, a liquidated damages clause will be void. It serves as a punishment or as a deterrent against the breach of a contract. "One View Too Many." Boston Bar Journal 34 (April).n. The American Law Reports annotation on liquidated damages states, "Damages for breach by either party may be liquidated in the agreement but only at an amount that is reasonable in light of the anticipated or actual harm caused by the breach. A term fixing unreasonably large liquidated damages is unenforceable on grounds of public policy as a penalty" (12 A. Penalties are granted when it is found that the stipulations of a contract have not been met. an amount of money agreed upon by both parties to a contract which one will pay to the other upon breaching (breaking or backing out of) the agreement or if a lawsuit arises due to the breach. First, they establish some predictability involving costs, so that parties can balance the cost of anticipated performance against the cost of a breach. In this way liquidated damages serve as a source of limited insurance for both parties. 2d 359, 1989), have granted courts permission to compare the amount set forth in the liquidated damages provision against the actual damages caused by a breach of contract. "Liquidated Damages and the Penalty Rule: A Reassessment." Brigham Young University Law Review 1991. It is not necessary to file for bankruptcy to liquidate inventory.Liquidation can also refer to the act of exiting a securities position.
Liquidated damages, on the other hand, are an amount estimated to equal the extent of injury that may occur if the contract is breached. The non-defaulting party may obtain a judgment for the amount of liquidated damages, often based on a stipulation (clear statement) contained in the contract, unless the party who has breached the contract can make a strong showing that the amount of liquidated damages was so "unconscionable" (far too high under the circumstances) that it appears there was fraud, misunderstanding or basic unfairness. By this term is understood the fixed amount which a party to an agreement promises to pay to the other, in case he shall not fulfill some primary or principal engagement into which he has entered by the same agreement it differs from a penalty. When the damages are uncertain, and not capable of being ascertained by any satisfactory or known rule; whether the uncertainty lies in the nature of the subject itself, or in the particular circumstances of the case.
Notwithstanding the substantial logic and appeal of this argument, the court dismissed it almost out of hand by using a form of "boot-strap" argument--despite what appears to be contrary conduct, the owner cannot be said to be "estopped" from making this argument because (1) caselaw permits owners to claim Liquidated damages: the forgotten remedy in noncompete disputes: damages are often difficult to prove in unfair competition cases.
In finance and economics, liquidation is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations as and when they come due. Bankruptcy Code governs liquidation proceedings; solvent companies can also file for Chapter 7, but this is uncommon.
These damages are determined when a contract is drawn up, and serve as protection for both parties that have entered the contract, whether they are a buyer and a seller, an employer and an employee or other similar parties.
The principle of requiring payments to represent damages rather than penalties goes back to the Equity courts, where its purpose was to protect parties from making Unconscionable bargains or overreaching their boundaries.