Liquidated Damages

If an organization cancels a meeting contract, computing the actual losses to the hotel's business can be cumbersome. For that reason, most hotel contracts use the concept of “liquidated damages,” agreeing in advance what the damages will be if the client cancels its obligation.

The parties can specify virtually any amount they agree on as liquidated damages, except that the figure cannot be what the law considers to be a “penalty” — that is, an amount in excess of the actual losses t

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