Liquidated Damages Clause Upheld

Liquidated damages clauses are contract terms that set forth in advance the amount of monetary damages due for a breach of the contract. In the matter of KOLD, LLC v. Croman, No. N13C-05-249, Johnston, J. (Nov. 25, 2014), the Superior Court was asked to examine a liquidated damages clause contained in an employment contract. Employer, KOLD, alleged that its prior employee, Croman, breached their employment contract. KOLD sought to recover $35,000 pursuant to a liquidated damages clause, which provided:

Termination of this Agreement by Employee, for any reason, prior to the expiration date of this Agreement or any renewal thereof, will cause loss to the Employer, including but not limited to, lost productivity/revenues/ratings, increased operating costs, loss of training/promotion provided the Employee, as well as costs in advertising, interviewing and other associated costs related to replacing the employee. The parties acknowledge however, that such costs are difficult to ascertain, calculate and foresee. Therefore, the parties agree that, in the event of breach of this contract on the part of the Employee, the Employee shall pay to the Employer, the sum of $35,000 dollars. Such payment is not a penalty but is for liquidated damages sustained, it being mutually agreed and understood between the parties hereto that such amount is...