For liquidated damages, or damages specified in a contract, it says they are ok if reasonable if they don't act like a penalty (to be safe, the liquidated damages should be kept to 10% of contract price). What does it mean that damages would act like a penalty, and why would staying under 10% of the contract price for damages help avoid the liquidated damages clause looking like a penalty?

Answer rating: 100% (QA)

Answer Liquidated damages are predetermined amounts of money specified in a contract that parties agree will serve as compensation in case of a breach ... View the full answer