Enforceability of Liquidated Damage Provisions

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. MCLA § 440.2718.

In Michigan, liquidated damage clauses are routinely upheld. Parties to a contract can agree and stipulate in advance as to the amount to be paid in compensation for loss or injury, which may result in the event of a breach of the agreement. Such a stipulation is enforceable, particularly where the damages, which would result from a breach, are uncertain and difficult to ascertain at the time the contract is executed. The amount must be reasonable and in relation to the possible injury suffered. Curran v Williams, 352 Mich. 278 (1958); Restatement of Contracts §339 (1932); Roland v Kenzie, 11 Mich. App 604 (1968);