Question 4

(a)Describe a real-life situation where parties would enter into a contract that includes a liquidated damages clause.

(b) Examine the relevant guidelines and factors which the courts would take into consideration when assessing whether a liquidated damages clause would be enforceable. In your answer, you are expected to cite relevant case law.

Based on these guidelines and factors, explain the circumstances in which the liquidated damages clause described in the situation in (a) above would be enforceable.