Liquidated Damages

A pre-set dollar amount owed if a party breaches, agreed in advance.

A liquidated-damages clause fixes the payment for a breach ahead of time instead of leaving it to a court. It is enforceable only if the amount is a reasonable estimate of actual harm — if it looks like a punishment, courts often refuse to enforce it.

In practice

“Customer shall pay $5,000 in liquidated damages for each day of delay.”

Don’t just look it up — see it in your document.

Before you sign, Main AI reads the actual contract and flags where a clause like this shifts risk onto you — in plain language, tied to the exact wording.

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When liquidated damages hold up — and when they don’t

The line is penalty versus estimate. A figure tied to genuinely hard-to-measure losses tends to hold; a round number that dwarfs any plausible harm reads as a penalty and is often unenforceable. Check whether the clause is your only remedy or stacks on top of others.

See this in your own document: run a free analysis — findings quote the exact language.

What it looks like in a real document

“The parties agree that actual damages would be difficult to calculate and that $10,000 represents a reasonable estimate, not a penalty.”

That “not a penalty” language is there for a reason — it is the exact issue a court examines. The real test is whether the number is a fair estimate, not what the clause calls itself.