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The law of liquidated damages is unique within the common law of contracts because it overtly affronts freedom of contract. The freedom of parties to structure their own agreement is universally acknowledged to be at the heart of the common law of contracts. In contrast to this freedom of contract, the limited enforcement of liquidated damages clauses, in which parties have agreed to a specified measure of damages in the event of breach, is a long recognized exception...
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In contrast to this freedom of contract, the limited enforcement of liquidated damages clauses, in which parties have agreed to a specified measure of damages in the event of breach, is a long recognized exception. The non-enforcement of liquidated or stipulated damages clauses, those that are classified as excessive penalties, is justified on public policy and fairness grounds...
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