Monthly Archives: February 2014

Throwing the “Penalty” Flag on Yourself–Late Payment Fee–Admitting the Purpose “Was to Have [Obligors] Pay Timely”

In Star Development Corp. v. Urgent Care Associates, Inc., 2013 WL 7089801 (Mo. Ct. App. W.D.), Landlord claims a fee of 15% late payment fee for any payment more than 10 days late is enforceable as liquidated damages. The test for enforceability quoted in support is:

1. “… the amount so fixed is a reasonable forecast of just compensation for harm that is caused by the breach, and

2. the harm that is caused by the breach is one that is incapable or very difficult of accurate estimation.”

The Argument

The quoted test for enforceability in Missouri of liquidated is not an atypical one.  As we shall see, the attempt to apply the principle stumbles.

More after the break …

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