Asked by Bailey Ennis on Jul 03, 2024
Verified
If the parties to a contract stipulate an amount that will be paid in the event of a breach, the courts will always enforce it.
Stipulate
Stipulate means to make a specific demand or condition as part of an agreement or contract.
Breach
The violation or non-fulfillment of a legal obligation, contract, or duty, which may give the aggrieved party the right to legal remedies.
- Understand the interpretation and enforcement of liquidated damage clauses in contracts.
Verified Answer
SN
Sogol NoroozijamaliJul 09, 2024
Final Answer :
False
Explanation :
Courts will enforce a stipulated amount for damages in the event of a breach (often called liquidated damages) only if the amount is a reasonable estimate of the likely damages and not a penalty. If the stipulated amount is deemed a penalty rather than a reasonable estimate of damages, courts may not enforce it.
Learning Objectives
- Understand the interpretation and enforcement of liquidated damage clauses in contracts.