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ARTICLE · 09 APRIL 2026

Liquidated Damages Or Unenforceable Penalty?

Farrell Fritz
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Levin Global (sometimes referred to as the “Fund”), is a Chilean entity created in 2011 to serve as a holding company for a group of 15 operating companies that provide consulting...

GlobalLitigation, Mediation & Arbitration
Becky (Hyun Jeong) Baek
Becky (Hyun Jeong) Baek

This one hurts to write about (from a trial lawyer’s perspective). Imagine this:

  • Your client sues his former business partners for breach of a non-compete.
  • You go to trial on behalf of your client, and win a hard fought victory: After a five-day jury trial, the jury returns a unanimous verdict in your client’s favor, conclusively finding that his business partners did breach the non-compete provision in the operative agreement.
  • But, when it comes time to enter judgment, the trial court determines that the $1,000,000 liquidated damages clause your client relied on is an unenforceable penalty.
  • The trial court also excludes from evidence the only other document calculating your client’s claimed damages arising out of the breach of the non-compete.

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