Final answer:
Liquidated damages clauses are enforceable only if damages were difficult to estimate at the time the contract was formed, and the amount agreed upon is a reasonable forecast of the damages that would have resulted from the breach.
Step-by-step explanation:
Liquidated damages clauses are enforceable only if damages were difficult to estimate at the time the contract was formed, and the amount agreed upon is a reasonable forecast of the damages that would have resulted from the breach.
This statement is true.
When two parties enter into a contract and anticipate the possibility of a breach, they sometimes include a liquidated damages clause that specifies a predetermined amount of damages that the breaching party must pay. In order for such a clause to be enforceable, it must meet certain criteria, one of which is that the damages must have been difficult to estimate at the time the contract was formed. Additionally, the agreed-upon amount must be a reasonable forecast of the damages that would have resulted from the breach.