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Old 13 November 2014, 02:58 AM
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Location: Los Angeles, CA
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Quote:
Originally Posted by erwins View Post
They can call it whatever they want in the contract. Technically, it is "liquidated damages," and private businesses (as well as individuals) can agree in contracts to be "fined" if they don't comply with the terms of the contract. And if by "imaginary police" you mean, "can the mall sue the store for breaching their contract and not paying the fine?" then the answer is yes. So, yes, a store is obligated to comply if they agreed to be obligated, and to pay the mall if they don't comply, and they can't, in those circumstances, just count on the mall not wanting to kick them out.

ETA: Or, what Lainie said.
Courts won't always enforce liquidated damages clauses if they appear to be excessive. The general rule is that you don't get punitive damages for breach of contact claims, and courts have pretty consistently held that you can't get around that by calling the penalty liquidated damages. It has to bear some reasonable relationship to foreseeable actual damages. There's room to argue what magnitude of losses the mall might suffer over a non-compliant store in this situation, but calling it a "fine" might suggest to the court that you weren't even trying to forecast your losses.
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