Liquidated damages provisions usually are enforceable

Liquidated damages provisions usually are enforceable. If a court finds that a provision calls for a penalty, the agreement as to the amount will not be enforced. How does a court determine if a provision is for liquidated damages or a penalty? Choose two answers.

When the parties entered into their contract, did they label the clause a “liquidated damages clause”?

Does the law of the state the contract was entered into allow penalty clauses?

When the contract was entered into, was it apparent that damages would be difficult to estimate in the event of a breach?

Was the amount set as damages a reasonable estimate and not excessive?