A car wash owner leased his equipment from a lessor under a five-year lease that was...

 

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A car wash owner leased his equipment from a lessor under a five-year lease that was renewable for 3 one-year periods. At the end of eight years, the lessor would "abandon" the equipment to the car wash (since he would have paid for it in full). After four years, the car wash owner defaulted. The lessor repossessed and resold the equipment. The lessor claims that the lessor is owed $2,000 by the car wash owner under a lease provision, which provides that the lessor could collect 10% of the equipment's total cost in the event of any default. The car wash owner claims the liquidated damages clause is invalid. Is the liquidated damages clause valid? A car wash owner leased his equipment from a lessor under a five-year lease that was renewable for 3 one-year periods. At the end of eight years, the lessor would "abandon" the equipment to the car wash (since he would have paid for it in full). After four years, the car wash owner defaulted. The lessor repossessed and resold the equipment. The lessor claims that the lessor is owed $2,000 by the car wash owner under a lease provision, which provides that the lessor could collect 10% of the equipment's total cost in the event of any default. The car wash owner claims the liquidated damages clause is invalid. Is the liquidated damages clause valid?

Answer rating: 100% (QA)

Whether the liquidated damages clause is valid or not will depend on the laws and regulations in the specific jurisdiction where the lease agreement w... View the full answer