Jill agreed to build a house for Sam. The contract price of the house was $300,000 and it was to be completed by October 31st.

Sam wanted to ensure that the house would be completed on time and was concerned that if it were not, he would be unable to calculate how much he lost from the delay. At the time of the contract, Sam and Jill agreed to include a liquidated damages clause.

• What are liquidated damages and when are they allowed?
• Write your own example of a reasonable liquidated damages clause for the building contract.
• Write your own example of an unreasonable liquidated damages clause for the building contract.
• Explain why your examples are reasonable/unreasonable.