Liquidated Damages vs Penalty
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Remedies · Lesson 14
Liquidated Damages vs Penalty
這一課問的是：約定金條款為可執行之預定損害或不可執行之懲罰？
ActorActObjectStandardConsequence
Core Terminology · 7 must-know
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liquidated damages
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Sum stipulated as damages payable on breach.
預定損害。
reasonable forecast
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Sum must reasonably forecast probable loss at contracting.
合理預測。
difficult to ascertain
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Actual damages must be hard to determine.
難以確定。
penalty
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Designed to punish rather than compensate — unenforceable.
懲罰條款。
UCC §2-718
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Liquidated damages rule for goods.
UCC §2-718。
Rule Sentence · the workhorse
A liquidated-damages clause is enforceable if the stipulated sum was a reasonable forecast of probable loss at the time of contracting and the actual loss would have been difficult to determine; clauses functioning as penalties — punishing rather than compensating — are unenforceable.
Mini IRAC · build the Application
Issue. Is a contractor's clause requiring $10,000/day in liquidated damages for project delay enforceable when actual delay damages would be very hard to prove?
Rule. A liquidated-damages clause is enforceable where the stipulated sum was a reasonable forecast of probable loss at contracting and actual damages would have been difficult to determine.
Application (model). The contract stipulates $10,000/day for delay; parties anticipated delay damages would be difficult to measure, and $10,000/day was reasonable given the project scale. Because LD is enforceable when reasonable and the actual damages would be hard to measure, the fact that the figure was reasonable at contracting and actual delay damages are notoriously hard to prove means the clause is enforceable.
Pick the right element for each blank:
g1.
g2.
Conclusion. Therefore, the liquidated-damages clause is enforceable.
Practice Drill · tap to build the rule
Drop the chips here in correct order:
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