Liquidated damages:
A) must be reasonably related to actual losses that could be suffered
B) need not be related to actual losses that could be suffered
C) must be less than the actual losses that could be suffered
D) are usually much higher than the actual losses that could be suffered
E) are only available in some states

Question

Quizplus · Accepted Answer

Liquidated damages must be reasonably related to actual losses that could be suffered. This means that the amount specified in the contract must be a reasonable estimate of the damages that would result from a breach of contract. Courts will typically enforce liquidated damages clauses that meet this standard, but will invalidate clauses that are deemed to be punitive or excessive.

Liquidated Damages