Liquidated Damage Clauses

Damages payable by either party for default, or any other act or omission, including indemnity for loss or diminution of anticipated tax benefits or loss or damage to lessor's residual interest, may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the default or other act or omission. (6 Del.C. § 2A-504)

In enforcing a liquidated damages provision, the Court must distinguish between a valid liquidated damages provision and an invalid penalty clause. “Where the damages are uncertain and the amount agreed upon is reasonable, such an agreement will not be disturbed.” Lee Builders, Inc. v. Wells, 103 A.2d 918, 919 (Del. Ch. 1954). In a finance lease, the lessee, before signing the least contract, should receive an accurate and complete statement designating, among other things, liquidated damages, including those of a third party, such as the manufacturer of the goods, provided to the lessor by the person supplying the goods in connection with or as part of the contract by which the lessor acquired the goods or the right to possession and use of the goods. Del Code Ann. tit. 6 § 2A-103.