A liquidated damage clause is unenforceable if ________.
A) the actual damages are impractical to determine
B) the liquidated damages clause is considered a penalty
C) the liquidated damages are conscionable
D) the liquidated damages do not result in a loss of money for the nonbreaching party

Question

Quizplus · Accepted Answer

A liquidated damage clause is only enforceable if the amount stipulated as damages is a reasonable estimate of the actual damages that the non-breaching party will suffer as a result of the breach. If the amount stipulated is deemed to be a penalty, it will not be enforceable. If the actual damages are impractical to determine or the liquidated damages are conscionable, that does not automatically render the clause unenforceable. However, if the liquidated damages do not result in a loss of money for the non-breaching party, it would make the clause unnecessary and unenforceable.

A Liquidated Damage Clause Is Unenforceable If ________