A Court Will Not Enforce a Liquidated Damages Clause When

Multiple Choice

A court will not enforce a liquidated damages clause when which of the following is true?

A) The amount specified is too small and considered to be unfair.
B) The amount of actual damages is significantly greater than the amount specified as liquidated damages.
C) The amount was agreed to by the parties prior to the existence of an actual breach.
D) The amount is so large that it is viewed as a penalty.
E) The actual damages are difficult to determine and compare to the amount specified as liquidated damages.