I have written a number of blog posts on liquidated damages over the years, and one of the foundational points under Massachusetts law is that they will be enforceable if, but only if, at the time the contract is executed:

1. It would be difficult to determine the damages that would accrue if the contemplated breach were to occur; and

2. The liquidated amount designated in the contract is a reasonable estimate of the actual damages that a party would suffer if the breach were to occur.

In Cummings Properties v. Hines, the Supreme Judicial Court emphatically re-affirmed Massachusetts’s commitment to this “single look” doctrine.

In 2016, Cummings Properties entered into a five-year lease with MCO, Inc., and Darryl Hines, MCO’s sole officer and director, signed on as guarantor. The lease provided that if MCO defaulted, Cummings could terminate and the “entire balance of rent due . . . immediately [would] become due and payable as liquidated damages, since both parties agree that such amount is a reasonable estimate of the actual damages likely to result from such breach.”

Within only a few months of signing the lease, MCO defaulted on its payment obligations and was evicted. One … Keep reading