Liquidated Damages 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. M.G.L. c. 106, §2A-504. "

A liquidated damages clause in a contract is enforceable “so long as it is not so disproportionate to anticipated damages as to constitute a penalty.” NPS, LLC v. Minihane, 451 Mass. 417, 420 (2008). A liquidated damages provision will usually be enforceable if (1) “at the time of contracting the actual damages flowing from a breach were difficult to ascertain” and (2) “the sum agreed on as liquidated damages represents a ‘reasonable forecast of damages expected to occur in the event of a breach.’” NPS, LLC, at 420; Cummings Properties, LLC v. National Communications Corp., 449 Mass. 490, 494 (2007).