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Anthony makes a contract to sell a rare painting to Laura for $100,000. The written contract specifies that if Anthony should fail to perform the contract, he will pay Laura $5,000. as liquidated damages. Anthony fails to deliver the paining and is sued by Laura for $5000. Can she recover this amount? Explain using IRAC: Issue, Rule, Analysis, and Conclusion.

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Answer: Yes

Explanation:

Laura is able to recover this amount as it is within the domain of enforceable liquidated damages.

For a liquidated damage to be enforceable;

  1. The liquidated damage must be reasonable
  2. The damages as a result of the breach are difficult to ascertain.

The liquidated damage amount is $5,000 and when this is compared to the total contract amount of $100,000, it is reasonable.

As the painting is rare, we cannot know the damages accruing to Laura for being unable to acquire this painting.

Both requirements have been fulfilled which means that Laura can recover the amount of $5,000.

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