Common use of Liquidated Damages Not Penalty Clause in Contracts

Liquidated Damages Not Penalty. Because of the unique nature of the economic damages and losses that would be sustained under this Agreement where specified damages are used, it is difficult or impossible to determine with precision the amount of damages that would or might be incurred by a non-breaching Party in such circumstances. Therefore, it is acknowledged and agreed by the Parties that in such circumstances: (a) it would be impracticable or extremely difficult to fix the actual damages to a non-breaching Party resulting therefrom; (b) any sums that would be payable under this Agreement in such circumstances are stipulated by the Parties to be in the nature of liquidated damages and not a penalty, and are acknowledged and agreed to be fair, reasonable and appropriate; (c) such payment represents a reasonable estimate of compensation for a portion of the losses that may reasonably be anticipated from such failure and shall, without duplication, be the sole and exclusive measurement of monetary damages of such non-breaching Party with respect to such circumstances; and (d) if the breaching Party challenges the enforceability of such liquidated damages, the non-breaching Party may elect at its option for damages in such circumstances to be based on actual damages instead of liquidated damages and such actual damages shall not be subject to the limitations set forth in Section 12.1.