Law
The Enforceability of Liquidated Damages Clauses in Construction Contracts
Quick fact
In common law jurisdictions, a liquidated damages clause will be struck down as a penalty if it is 'extravagant and unconscionable' compared to the greatest possible loss that could be anticipated, even if the parties agreed to it freely.
Why this is interesting
You sign a construction contract with a clause that says 'If you're late, you pay $10,000 per day.' But what if the real cost of delay is only $100? Is that clause worth the paper it's written on?