Benefits and Consequences of Having a Liquidated Damages Clause in a Contract Discussion

Associated Objective

• Describe how liquidated damages clauses affect a contract

Your company sells parts to manufacturing businesses all over the country. It is essentially the only company that provides this part, vital to certain machinery. You attended a trade conference and learned of companies that were sued for loss of profits and other types of damages when they failed to provide or deliver products as promised. You checked and found out that many of your orders are considered urgent and are shipped express for on-time delivery.

You are concerned because your sales contract is very basic and does not have any limitation of damages clauses. You realize your company is open to being sued for a lot of money if you fail to deliver a part as promised.

Prepare an email to your legal department to:

• Express concern about the lack of protection in your sales contract
• Recommend one provision/clause to include in your sales contract to help limit your company’s liability for certain damages
• Explain why you chose that provision and what damages you are trying to reduce exposure to
• Discuss the ethical implications of your decision to include this provision in the sales contract

Initial post:

• Initial post must be 300 to 400 words in length or a minimum of about ten (10) sentences
• Be thoughtful and substantive
• Respond to discussion prompt and demonstrate higher-order thinking (apply, analyze, synthesize, evaluate, examine, pose, or connect course concepts to business law)
• Follow APA formatting and documentation guidelines when referring to course readings and other materials
• Use proper spelling, grammar, and punctuation

Required Text

Cheeseman, H. (2019). Business law. (10th ed.) Upper Saddle River, NJ: Pearson. ISBN: 978-0134728780