What are liquidated damages?
Liquidated damages are those agreed upon by the parties to a contract, to be paid in case of breach thereof. (Art. 2226, Civil Code)
When shall liquidated damages be reduced?
Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable. (Art. 2227, Civil Code)
How shall liquidated damages be determined if the breach of
contract committed was not the one contemplated by the parties?
When the breach of the contract committed by the defendant is not the one contemplated by the parties in agreeing upon the liquidated damages, the law shall determine the measure of damages, and not the stipulation. (Art. 2228, Civil Code)
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