Liquidated Damages Clause
(NJ)

Summary

This liquidated damages clause template may be used in a commercial contract, governed by New Jersey law, to liquidate damages arising from a breach of such contract. This template includes practical guidance and drafting notes. This clause will be enforceable if the amount of the liquidated damages represents a reasonable and fair attempt by the parties to calculate future damages should a party breach the agreement, and must bear a reasonable relationship to the damages that would likely result from a breach. Such a clause will not be enforceable if it is deemed to constitute a penalty, rather than a reasonable effort by the parties to forecast damages. See N.J. Stat. § 12A:2-718. For more information regarding liquidated damages, see Damages for Breach of Commercial Contract (NJ), UCC Damages and Remedies, and Mitigation of Damages in Sale of Goods Contracts. For non-jurisdictional liquidated damages clauses, see Liquidated Damages (Sale of Goods) Clauses.