An employment contract may state the amount of liquidated damages to be paid if the contract is breached. Upon a party's breach, the other party will recover this amount of damages whether actual damages are more or less than the liquidated amount.
If the agreed-upon liquidated damage amount is unreasonable, the Court will hold the liquidated damage clause to be void as a penalty. If the Court declares the clause to be void, the employee would have to prove the actual damages.
A liquidated damages' clause in an employment contract addressing breach by an employer is a crucial aspect of protecting the rights and interests of employees in North Dakota. This provision establishes a predetermined sum of money that an employer must pay as compensation in the event of a breach of contract. It aims to estimate the potential losses suffered by the employee due to the employer's failure to fulfill their contractual obligations. In North Dakota, there are primarily two types of liquidated damages clauses frequently used in employment contracts addressing breach by the employer: 1. General Liquidated Damages Clause: This type of clause sets a specific amount of money that the employer must pay to the employee if they breach the employment contract. The predetermined sum agreed upon accounts for the potential harm caused by the employer's failure to fulfill contractual obligations. It serves as a form of protection for employees by ensuring they receive compensation for any harm caused due to the employer's breach. 2. Liquidated Damages Clause Limiting Employee Remedies: This type of liquidated damages clause provides a limit on the compensation an employee can seek in the event of a breach by the employer. The clause sets a cap on the damages the employee can claim, preventing them from seeking compensation beyond the predetermined amount. By limiting the employee's remedies, the employer can mitigate potential excessive liabilities resulting from breaching the employment contract. These liquidated damages clauses play a crucial role in providing certainty and protecting the interests of both employers and employees in North Dakota. By including such provisions in employment contracts, parties can establish clear expectations regarding the consequences of contract breaches and avoid costly disputes in the future.A liquidated damages' clause in an employment contract addressing breach by an employer is a crucial aspect of protecting the rights and interests of employees in North Dakota. This provision establishes a predetermined sum of money that an employer must pay as compensation in the event of a breach of contract. It aims to estimate the potential losses suffered by the employee due to the employer's failure to fulfill their contractual obligations. In North Dakota, there are primarily two types of liquidated damages clauses frequently used in employment contracts addressing breach by the employer: 1. General Liquidated Damages Clause: This type of clause sets a specific amount of money that the employer must pay to the employee if they breach the employment contract. The predetermined sum agreed upon accounts for the potential harm caused by the employer's failure to fulfill contractual obligations. It serves as a form of protection for employees by ensuring they receive compensation for any harm caused due to the employer's breach. 2. Liquidated Damages Clause Limiting Employee Remedies: This type of liquidated damages clause provides a limit on the compensation an employee can seek in the event of a breach by the employer. The clause sets a cap on the damages the employee can claim, preventing them from seeking compensation beyond the predetermined amount. By limiting the employee's remedies, the employer can mitigate potential excessive liabilities resulting from breaching the employment contract. These liquidated damages clauses play a crucial role in providing certainty and protecting the interests of both employers and employees in North Dakota. By including such provisions in employment contracts, parties can establish clear expectations regarding the consequences of contract breaches and avoid costly disputes in the future.
