What is a liquidated damages clause?

A liquidated damages clause is a part of a contract in California that states a specific amount of money one party must pay the other if they breach the contract. This amount is typically agreed on by both parties in advance of an agreement and is set as an estimate of what kind of damages the breach may cause. This is helpful for both parties as it gives them some assurance that the party who breaches the agreement will not be able to escape with paying no damages for their wrongdoings. Additionally, since the amount is already agreed on beforehand, neither party has to go through the process of determining what kind of damages the breach caused. The stipulated amount allows both parties to move on with their lives in a timely manner with a known resolution.

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What is a liquidated damages clause?

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