Which one of the following statements accurately describes the effect of a liquidated damages clause on a plaintiff's claim in a breach of contract action?
A) This clause requires the injured party to take all reasonable steps to mitigate (lessen) his losses.
B) The plaintiff will likely be awarded a judgment for all the damages that "naturally and directly flow" from the breach.
C) This clause conclusively determines the amount of damages that the court can award.
D) The court will likely award the amount set out in the clause if it considers that to be a genuine estimate by the parties of the likely consequences of the breach.
E) Liquidated damages only apply to losses caused by excess water, such as floods or tidal waves.

Question

Quizplus · Accepted Answer

A liquidated damages clause specifies a predetermined amount of damages that the parties agree is a reasonable estimation of the likely damages in the event of a breach. Courts will enforce this amount if it is considered a genuine pre-estimate of loss and not a penalty.

Which One of the Following Statements Accurately Describes the Effect