Liquidated Damages
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Statutes
Damages for default, or any other act or omission, including indemnity for loss or diminution of anticipated tax benefits or loss or damage to the lessor’s residual interest, may be liquidated in the lease agreement. Damage amount must be reasonable in light of the harm caused. Md. Code, Com. Law; § 2A-504. ; Md. Code, Com. Law; § 2-718.
Cases
Liquidated damage clauses are enforceable in Maryland if they are not a penalty. The decisive element is the intention of the parties. The liquidated damages must be a reasonable forecast of the just and fair compensation of the harm that would result from the breach of contract. *Taylor v.* *Grafton*, 273 Md. 649, 332 A.2d 651 (1975); *see also* *Willard Packaging Co. v. Javier*, 169 Md.App. 109, 899 A.2d 940 (2006) (holding that where gross inequity of bargaining power exists, the proponent of the liquidated damages clause has the burden of proving that the clause is enforceable).
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Contributors
Steven N. Leitess
Leitess Friedberg PC
The statutory information was edited and reviewed with the support of MultiState
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