It is not unusual for employment agreements to mandate that when an employee leaves a company, whether voluntarily or by termination, he or she must return all company information. As the employer in EventMonitor v. Leness recently learned, however, relying on the courts to enforce such an obligation is risky, at best.
Two weeks ago, I participated on a panel for a webinar on liquidated damages with three other panelists from New Jersey, Florida and Texas. In preparing with the other panelists, I was surprised to learn that while there are many common threads running through the law of liquidated damages across the country, there also are… Continue Reading
When thinking about liquidated damages, most people focus on the fact that a properly drafted liquidated damages provision will enable the non-breaching party to recover a set amount without ever having to prove how much, if any, actual damages were incurred. What people often forget to consider, however, is that a liquidated damages clause also… Continue Reading
The obvious purpose of a liquidated damages provision is to make your client whole in the event that your business partner breaches the agreement. Nevertheless, K.G.M. Custom Homes. v. Prosky highlights that simply having a valid and enforceable liquidated damages provision is not enough to ensure this.
More than once, an in-house counsel has called me up wanting to sue a former employee because s/he has been “bad-mouthing” the company despite having agreed not to disparage the company as part of a settlement or severance agreement. Nevertheless, I Often have had to give the client the bad news that, in light of… Continue Reading
As suggested in “The Effective Use of Liquidated Damages Provisions,” there can be a fine line between an enforceable liquidated damages provision and an unenforceable penalty clause. Thus, when drafting an agreement, it is important to keep in mind that a payment-for-breach provision will only be enforceable if, at the time of drafting: It would be difficult… Continue Reading
The Basics of Liquidated Damages Provisions A liquidated damages provision fixes the amount of money one party will pay to the other if a breach occurs. Because the law of contracts is designed to be compensatory, however, a payment-for-breach-clause that is penal will not be enforceable (Some reasons for this are discussed in “Why Not Enforce ‘Penalty’… Continue Reading