Fresh Food Direct, LLC, entered into a lease agreement with Jet Star Realty, LLC. Fresh Food terminated
Question:
Fresh Food Direct, LLC, entered into a lease agreement with Jet Star Realty, LLC. Fresh Food terminated the lease before its term’s end, and the parties disputed the amount of rent that Fresh Food still owed Jet Star. Eventually, the parties reached an agreement and signed a settlement agreement. The settlement agreement stipulated that Fresh Food would pay Jet Star \($20,000\) in six monthly installments of
\($3,333.33,\) due the first of each month beginning November 2016. The settlement agreement contained a provision that if a payment was not received by the fifth business day of the month, Jet Star’s attorneys were required to notify Fresh Food that it was in default. If Fresh Food did not cure the default within 10 days after the notice was sent, Jet Star had the right to enter a judgment of \($25,000\) minus any payments already made.
Fresh Food’s final payment was due on April 1, 2017. On April 11, 2017, Jet Star’s attorneys wrote Fresh Food informing Fresh Food it was in default. This notice was followed up with an email on April 18, 2017, and April 26, 2017, the latter of which threatened to commence default proceedings. Fresh Food made its final payment on May 5, 2017. According to Jet Star, it prepared a motion for entry of judgment on May 4, 2017, and mailed it to Fresh Food the same day. Fresh Food claims that it did not receive the motion until May 8, three days after it made the final payment. In its motion, Jet Star requested the court to enter a judgment in the amount of the final payment plus \($5,000.\) The trial court denied the motion, and Jet Star appealed. Is the provision in the agreement an enforceable liquidated damages clause? Why or why not?
Step by Step Answer:
Dynamic Business Law
ISBN: 9781260733976
6th Edition
Authors: Nancy Kubasek, M. Neil Browne, Daniel Herron, Lucien Dhooge, Linda Barkacs