October 18, 2017

Colorado Supreme Court: Damages Clause Not Void Where Non-offending Party Offered Choice of Actual or Liquidated Damages

The Colorado Supreme Court issued its opinion in Ravenstar, LLC v. One Ski Hill Place, LLC on Monday, September 11, 2017.

Freedom of Contract—Liquidated Damages Clauses—Contractual Damages.

In this case, the Colorado Supreme Court considered whether a liquidated damages clause in a contract is invalid because the contract gives the non-breaching party the option to choose between liquidated damages and actual damages. The court concluded that such an option does not invalidate the clause. Instead, parties are free to contract for a damages provision that allows a non-breaching party to elect between liquidated damages and actual damages. However, such an option must be exclusive, meaning a party who elects to pursue one of the available remedies may not pursue the alternative remedy set forth in the contract. Therefore, under the facts of this case, the liquidated damages clause in the contracts at issue is enforceable. Accordingly, the supreme court affirmed the judgment of the court of appeals.

Summary provided courtesy of Colorado Lawyer.

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