Is the liquidated damage amount stated in the contract, Ask an Expert

Management Studies

Mica Co. agreed to build a commercial storage building by September 1 for Pack Rat Storage. It was hard to predict Pack Rat's losses if the building was not completed on time. The parties estimated that Pack Rat would lose $200 in storage fees per day if the building was not completed on time. Thus, the contract required Mica to pay liquidated damages of $200 per day if the work was completed late. Mica finished ten days late. Pack Rat actually lost $1,800 due to the breach.

• Is the liquidated damage amount stated in the contract between Mica Co. and Pack Rat Storage valid, or is it an invalid penalty?

• How much in damages can Pack Rat Storage recover from Mica Co.?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M9172039

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