Liquidated Damages Provision and Unconscionability

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An argument that has succeeded in avoiding an otherwise valid liquidated damages clause is where the liquidated damages amount “shocks the conscience” of the court.  In other words, if the stipulated sum is simply too great in comparison to the contract value itself, then the liquidated damages will not be enforced.  This analysis compares the stipulated sum with the contract value.  For example, in Hook v. Bomar, 320 F.2d 536 (5th Cir. 1968), the loss of a $30,000 deposit on a $95,000 contract was found unconscionable, and the liquidated damages provision was not enforced.


Trenton H. Cotney
Board Certified in Construction Law
Trent Cotney, P.A.
1207 N Franklin St, Ste 222
Tampa, FL 33602
(813) 579-3278

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