Uniform Bar Examination (UBE)

A liquidated damages clause in a contract is enforceable when:

Both contracting parties are sophisticated businesses represented by counsel The specified amount penalizes the breacher to deter future breach The amount is a reasonable pre-estimate of anticipated harm and actual damages are difficult to calculate The clause is included in a written contract for a sale of goods over $500

Correct Answer:

The amount is a reasonable pre-estimate of anticipated harm and actual damages are difficult to calculate

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