Liquidated Damages Clauses Will Generally Not Be Enforced Where Courts

question 112

Essay

Liquidated damages clauses will generally not be enforced where courts view them as excessive,but courts generally do not inquire into whether liquidated damages clauses are too small.For example,when taking a roll of film to be developed,most developers include a liquidated damages clause to provide a new roll of film,and nothing more,in the event that the customer's film is lost or destroyed.Why is there this difference in treatment? Do you agree with this rule?

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Definitions:

Forecasting Error

Forecasting error refers to the difference between actual outcomes and previously predicted values, directly impacting planning and decision-making.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the degree to which a company can leverage fixed costs.

Capital Intensive

Refers to industries or businesses that require large amounts of money to buy, maintain, or improve their assets such as property, plants, and equipment.

Variable Costs

Costs associated with a business that fluctuate according to operational levels.