I. damages whose amount the parties designate during the formation of a contract for the injured party to collect as compensation upon a specific breach (e.g., late performance). ii. The purpose of a liquidated damages provision is to calculate how much one party stands to lose if the contract is breached or performance is not delivered. Courts will enforce these provisions if they decide it would be hard to estimate the harm resulting from a broken contract and the damages described in the contract are reasonable, meaning their amount is not more than the actual losses suffered. iii. The sole purpose of liquidated damages is to provide a method for calculating damages that would be difficult to prove otherwise iv. There will be minor differences in how jurisdictions will treat liquidated damages provisions. However, in general, there are two important factors which determine if the provision is valid. If the court cannot detect these two elements in the provision, then it will not be enforced. 1. The first factor is uncertainty, meaning quantifying the potential damage of a breach of contract would be difficult. 2. The second issue is if the damages listed are reasonable and in proportion to the actual harm in question.