Liquidated Damages

Question 1

Liquidation Clause is

Answer 1

clause that anticipates the possibility of a reach and determines in advance what injury a non-breaching party would suffer

Question 2

Enforceable when?

Answer 2

only when good faith estimate is used to anticipate actual damages of breach

Question 3

Cannot be?

Answer 3

an amount disproportionate to the anticipated damages.
This would be a penalty/punitive damages, which are unenforceable in any K
but can be a deterrent if meets good faith estimate test