Lecture 12

Question 1

Liquidated damage clause

Answer 1

A provision placed in the contract itself that specifies the consequences of breach

Answer 2

The liquidated damage clause must be an attempt to estimate actual damages rather than to penalise the party for breach

Answer 3

The liquidated damages clause must be a reasonable estimate of likely damages at the time the contract was entered into and the party seeking to enforce the clause has suffered actual damages that are hard to calculate accurately

Answer 4

A blunderbuss clause stipulates the same sum of money as liquidated for any breach whether trivial or important.

At least where the actual damages turns out to be trivial most courts will not enforce a blunderbuss clause

Answer 5

On the MBE you’ll sometimes see this “ no enforcement of blunderbuss clause” rule applied to non compete clauses.

If the non compete calls for the same fixed amount of damages regardless of the severity that fixed amount will not be recoverable. The P will be limited to those damages she can actually prove