A liquidation of damages clause in a consumer contract is enforceable if it:
A) is not in excess of twice the provable damages.
B) is agreed to by both parties to the contract.
C) reasonably attempts to estimate the actual harm caused by a breach.
D) is a reasonable amount designed to punish the breaching party.

Question

Quizplus · Accepted Answer

A liquidation of damages clause is enforceable if it reasonably attempts to estimate the actual harm caused by a breach. It cannot be designed to punish the breaching party or be excessive in relation to the provable damages. Both parties need not agree to the clause, but it should be written clearly and fairly disclosed to the consumer.

A Liquidation of Damages Clause in a Consumer Contract Is