Liquidated Damages
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Statutes
If the parties agree in their contract what the damages for a breach shall be, they are said to be liquidated and, unless the agreement violates some principle of law, the parties are bound thereby. (Ga. Code Ann., § 13-6-7)
Cases
A liquidated damages clause in a contract will be enforced if three requirements are met: (1) the injury caused by the breach is difficult or impossible of accurate estimation, (2) the parties intended to provide for damages rather than a penalty, and (3) the stipulated sum is a reasonable pre-estimate of the probable loss resulting from the breach.
Comments
Court's will enforce liquidated damages clauses, but ensure that the you go through the process set forth above for determining what the liquidated damages are, including making a pre-estimate of potential damages which the liquidated damages should be based upon.
Contributors
Brittany S. Ogden
The statutory information was edited and reviewed with the support of MultiState
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