The general requirements for a liquidated damages clause to be enforceable are that:
A) actual damages are difficult to determine and the liquidated damages amount is reasonable.
B) actual damages exceed the amount foreseen by the parties.
C) the liquidated damages clause applies only to unforeseeable damages.
D) the breaching party used its best efforts to avoid a breach of the contract.
E) the parties have rescinded the contract.

Question

Quizplus · Accepted Answer

In order for a liquidated damages clause to be enforceable, the actual damages must be difficult to determine or foresee, and the liquidated damages amount must be reasonable. If these requirements are met, then the parties can agree in advance on the amount of damages that will be paid in the event of a breach, which provides certainty and predictability for both parties. However, if the liquidated damages amount is seen as a penalty or is too high in relation to the actual damages, the clause may be deemed unenforceable.

The General Requirements for a Liquidated Damages Clause to Be