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Two of the most authoritative statements concerning liquidated damages are contained in the Uniform Commercial Code and the Restatement (Second) of Contracts, both of which emphasize reasonableness as the touchstone. Farnsworth, supra, § 12.18 at 938. Thus, section 2-718 of the Uniform Commercial Code, adopted in New Jersey as N. J.S.A. 12:2-718, provides: (1) Damages for breach by either party may be liquidated in the agreement but only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy.


Similarly, the Second Restatement of Contracts provides: Damages for breach by either party may be liquidated in the agreement but only at an amount that is reasonable in the light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss. A term fixing unreasonably large liquidated damages is unenforceable on grounds of public policy as a penalty. [Restatement (Second) of Contracts § 356(1) (1981).] Consistent with the trend toward enforcing stipulated damages clauses, courts have recognized that such clauses should be deemed presumptively reasonable and that ...

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