Liquidating damages north carolina
Consideration of Other Bids After Withdrawal/Resubmitting Bids 4.
Available Relief CHAPTER THREE ARCHITECT AND ENGINEER I.
In short, no matter what you call it — a penalty or a pre-determined damage provision — the court will analyze such provisions based upon their impact on the parties, and not necessarily on their designations. A liquidated damages clause will generally be considered unreasonable, and, therefore, unenforceable if it bears no reasonable relationship to the range of actual damages that the parties could have anticipated would flow from a breach.
The amount set as liquidated damages must represent the result of a reasonable endeavor by the parties to estimate a fair average compensation for any loss that may be sustained.
For example, in one decision, a liquidated-damages provision in a partnership agreement provided that the damages to the partnership for the loss of fees from any clients taken by expelled partners would be measured by the firm’s time charges for those clients for the 12 months immediately preceding their loss.
Despite the parties’ reference to the provision as a penalty and evidence indicating the provision was intended to make it difficult for a partner who left the firm to take the firm’s clients, the court enforced the provision because it demonstrated a reasonable estimate of the harm that might be anticipated from the loss of the firm’s clients.
A Courts Modification/Correction of an Arbitration Award J. Order to Compel Arbitration is a Final Order Subject to Appeal 2. Standard of Review for Order to Compel Arbitration V.
If the liquidated damages clause provides that the recovery of the specified sum as damages is the sole remedy in the event of default, the parties may have excluded the remedy of specific performance. Considerations When Selecting an Insurance Carrier C. CONCLUSION CHAPTER TWELVE LITIGATION AND ALTERNATIVE DISPUTE RESOLUTION I. If, however, the sole purpose of a liquidated-damages provision is to coerce compliance with the contract and not to compensate the innocent party for damages resulting from the breach, the provision is a penalty and not enforceable.As an example, in , the provision at issue allowed a lender to waive prepayment charges equal to six months’ interest if the borrower made no late payments and was not in default under the note.However, in this case, the provision was not construed as a prepayment charge because the nature of the threatened charge was to coerce timely payment of interest, not to compensate the lender for interest payments lost through prepayment of principal.The court held that a charge of six months’ interest on the entire principal, imposed for any late payment or other default, could not be defended as a reasonable attempt to anticipate damages from default.Finally, especially in real estate transactions, specific performance is an important remedy for the parties.If the parties agree upon a liquidated damages provision, the remedy of specific performance is not necessarily waived. Notice Requirements Associated with Project Delay D. STATUTE OF REPOSE CHAPTER NINE RISK MANAGEMENT: INSURANCE AND INDEMNIFICATION I.