National Fitness’s Demand For Liquidated Sample Clauses

National Fitness’s Demand For Liquidated. Damages In its complaint, National Fitness demands $282,340.00 in liquidated damages in addition to payment of three monthly license fees, late fees, and attorneys’ fees and costs. Although the court cannot resolve the contract dispute at the summary judgment stage, the parties’ dispute about National Fitness’s claim for liquidated damages is ripe because Custom Built has moved the court to dismiss the claim on the basis that the liquidated damages clause is unenforceable as a matter of law. The liquidated damages clause is found in the Agreement’s Paragraph 19, titled “Remedies”: Except as otherwise provided for herein, no remedy conferred by any of the specific provisions of this Agreement is intended to be exclusive of any other remedy. Each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder, now or hereafter existing at law or in equity, by statute or otherwise. In the event of Default by Custom Built, [National Fitness’s] remedies shall include, but not be limited to, recovery of liquidated damages in the amount of $282,340.00, based upon six (6) months’ minimum License Fee Amount averaged over the Initial Term from January 1, 2007, to December 31, 2011. . . . (Agreement ¶ 19 (emphasis added).) Tennessee case law defines “liquidated damages” as “a sum stipulated and agreed upon by the parties at the time they enter their contract, to be paid to compensate for injuries should a breach occur.” Guiliano v. Xxxx, Inc., 995 S.W.2d 88, 96-97 (Tenn. 1999) (internal quotation marks and citations omitted). “The fundamental purpose of liquidated damages is to provide a means of compensation in the event of a breach where damages would be indeterminable or otherwise difficult to prove.” Id. at 98. Courts will generally enforce the provision “[i]f the liquidated sum is a reasonable prediction of potential damages and the damages are indeterminable or difficult to ascertain at the time of contract formation.” Id. at 99. But liquidated damages provisions are disfavored “when the provision serves only to penalize the defaulting party for a breach of contract.” Id. at 98. Generally, the parties to a contract are free to agree upon liquidated damages and upon other terms that may not seem desirable or pleasant to outside observers. In that respect, courts should not interfere in that contract, but should carry out the intentions of the parties and the terms bargained for in the contract, unless those terms violate publi...