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 employer would have to prove the actual damages.
The New Mexico Liquidated Damage Clause in Employment Contract Addressing Breach by Employee is an important provision that outlines the consequences for an employee's violation of contract terms. This clause provides clarity and protection for both the employer and the employee in case of a breach. The primary objective of the New Mexico Liquidated Damage Clause is to establish a predetermined amount of compensation that the breaching employee must pay to the employer in the event of a breach. This predetermined amount acts as a reasonable estimate of the damages that the employer may suffer due to the breach. There are different types or variations of the New Mexico Liquidated Damage Clause in Employment Contracts Addressing Breach by Employee. Some common examples include: 1. Specific Monetary Amount: This type of clause specifies a fixed or pre-determined amount that the employee must pay in the event of a breach. For instance, the contract may state that the employee will pay $10,000 as liquidated damages if they breach the contract. 2. Calculation-based Clause: In some cases, the New Mexico Liquidated Damage Clause may involve a formula or calculation to determine the damages owed. For example, the clause may specify that the employee will pay liquidated damages equivalent to six months' salary or a percentage of their annual compensation. 3. Restitution of Costs: Another variation of the New Mexico Liquidated Damage Clause involves the reimbursement of costs incurred by the employer due to the breach. This could include expenses related to recruiting a replacement or any losses suffered as a result of the employee's breach. It's important to note that the enforceability of a liquidated damage clause may vary depending on various factors, such as reasonableness and whether it is viewed as a penalty rather than a genuine estimation of damages. Additionally, the specific language and wording of the clause can significantly impact its validity. Employers must consult with legal counsel to ensure that the New Mexico Liquidated Damage Clause in their employment contracts adheres to state laws and is fair and reasonable. Employees should also seek legal advice to understand their obligations under such clauses before signing any employment agreements.
