Liquidated Damages

"Under the UCC as adopted by the state, 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. A term fixing unreasonably large liquidated damages is void as a penalty. NRS 104.2718

Regarding Leases, 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. NRS 104A.2504"

In keeping with its policy of permitting parties to negotiate the terms of their contracts, Nevada permits liquidated damages clauses. See Joseph F. Sanson Inv. Co. v. 268 Ltd., 106 Nev. 429, 435, 795 P.2d 493 (1990). A liquidated damages clause is prima facie valid, unless the party challenging its validity shows that the clause amounts to an unenforceable penalty. Id. “In order to prove that a liquidated damage clause constituted a penalty, the challenging party must persuade the court that the liquidated damages are disproportionate to the actual damages sustained by the injured party.” Haromy v. Sawyer, 98 Nev. 544, 547, 654 P.2d 1022 (1982).