UCLA School of Law

This article considers and criticizes the growing trend to enforce liquidated damages agreements on the grounds that their reflexive enforcement contravenes important public values. Although many have claimed the traditional presumption against such clauses is mysterious or unsupported, I contend that the traditional presumption against such clauses enforces important values central to the rule of law, including that private parties should not decide their own cases and that the public has an special interest in deciding what remedies are appropriate for breaches of legal duty. In delineating the theoretical foundations for treating stipulated damages differently than performance terms, I offer a distinctive, liberal, democratic perspective on contract and contractual breach that answers the ubiquitous arguments offered by libertarians and law and economics scholars that freedom of contract requires the contrary.