At times, the parties to a contract include a statement right in their contract wherein damages are explicitly set in the event one of the parties breaches the agreement. Such a statement is called a(n):
A) loss payable clause.
B) exclusion clause.
C) integration clause.
D) liquidated damages clause.

Question

Quizplus · Accepted Answer

A liquidated damages clause is a statement in a contract that sets a fixed amount of damages that must be paid by the breaching party if the agreement is not honored. This clause protects the non-breaching party from having to prove actual damages in court.

At Times, the Parties to a Contract Include a Statement