74.

Validity and Construction of Liquidated Damages Provisions

Liquidated damages provisions are no longer viewed with disfavor. United States v. Bethlehem Steel Co., 205 U.S. 105, 119 (1907); Southwest Engineering Co. v. United States, 341 F.2d 998, 1001 (8th Cir.), cert. denied, 382 U.S. 819 (1965). The validity of a liquidated damages clause is to be judged as of the time the contract is made, and not by subsequent events. See United States v. Bethlehem Steel Co., 205 U.S. at 105; Priebe & Sons v. United States, 332 U.S. 407, 412 (1947). The fact that damages may be uncertain in nature and amount, or are difficult of ascertainment, is a major reason for sustaining liquidated damage clauses. See Wise v. United States, 249 U.S. 361 (1919); United States v. Bethlehem Steel Co., supra ; Priebe & Sons v. United States, 332 U.S. at 422; cf. Rex Trailer Co. v. United States, 350 U.S. 148, 153 (1956). The fact that the actual damages may prove to be less, or greater, than the sum specified in the clause for liquidated damages is not controlling, and recovery will be given in the agreed amount. See Printing & Publishing Ass'n v. Moore, 183 U.S. 642 (1902). Recovery of liquidated damages may be had even though actual damages are not proved. United States v. Bethlehem Steel Co., supra. [cited in USAM 4-4.420]