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Liquidated Damages Clause

Liquidated damages clause is mostly used to enforce a leasing contract.

In a contract a liquidated damaged clause  is usually included, in all those cases it is difficult to calculate the actual damages. The stipulation regarding liquidated damages is mostly included in contracts for leasing and credit cards and is referred to the fee charged following to the late receipt of a payment. For example the terms for the payment of a loan from bank in the form of credit card.

The damages are "liquidated" in a sense that the contract predefines a specific amount that will be paid as damages, whatever the actual amount of damages may be. Nevertheles the predefined amount for damages must be close to the realistic possible damages with no significant deviations. A liquadated damages clause may not stand in court if the amount claimed for damages is disproportionate compared to the injury. The same happens if the liquidated damages amount appears to be intented as punitive companred to equitable compensation for the injury.

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