Liquidating damages Sms sex adult dating
The cost of the “full benefit” may also be too large, or more than one party wants to bear.
To avoid uncertainty, and to respect the parties’ freedom to fashion their own business affairs, Michigan law allows parties to agree upon the consequence of a broken promise and determine the damages for a breached contract within the contract itself. Since the mid-1800s, courts in most states have used the concept of foreseeability to define the two types of damages and to limit what a party could claim as the benefit of its bargain.
However, this often leads to an even more unpleasant surprise when the contract is breached, and the consequential or liquidated damages clause determines the remedy.
“BEWARE OF CONSEQUENTIAL AND LIQUIDATED DAMAGES” Consequential damages and liquidated damages generate more conflict than almost any other issue in contract law.In no event shall the total liquidated damages exceed $[_____]. Comment: Few contract clauses give both contractors and courts such apparent heartburn as liquidated damages. Similar to all contractual risks, contractors must understand it, must negotiate their best position (if the contract is negotiable), and must mitigate the risk with sound business management practices. Background On Contract Damages The purpose is to put the injured party in as good a position, as it would have been in, had the contract been properly performed by awarding it all costs that naturally and probably result from the breach.Michigan common law divides these costs into two categories: direct damages, which “naturally and ordinarily follow the breach” and consequential damages, which “ensue, not necessarily or ordinarily, but because of special circumstances.” Both direct and consequential damages are necessary to fully compensate it because the innocent party entered the contract with the intention of receiving the full benefit of its bargain, This sounds simple enough, but the costs associated with the full benefit of the bargain are frequently difficult to foresee when the contract is first formed.