Liquidated Damages
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Statutes
Damages for breach by either party may be liquidated in the agreement but only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is void as a penalty. (A.C.A. § 4-2-718)
Cases
Liquidated damage provisions are valid and enforceable. Penalty clauses, however, are not. Whether a liquidated damage provision is actually a penalty is a question of fact which rests upon whether “the sum named is a reasonable forecast of just compensation for the injury, if the harm is difficult or incapable of accurate estimation.” Roberts Contracting Co., Inc. v. Valentine-Wooten Road Public Facility Board, 320 S.W.3d 1, 17 (Ark. App. 2009).
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Contributors
Brad Nielsen, Esq.
The statutory information was edited and reviewed with the support of MultiState
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