It`s not that common for sellers to have fallen behind in the contract, but it happens. The above clause regarding lump sum damages only applies to buyers, and if the seller is late, both the buyer and the seller must reach an agreement with mediation or arbitration if they want to avoid going to court. These are situations like this where the arbitration clause is becoming more and more important. To learn more, click here. Consideration of a current flat-rate replacement clause is required by law. A lump sum indemnification clause “is considered effective and not a penalty if this amount does not exceed 5% of the purchase price”. 15 Okla. Stat. § 215 (B). The justification for any damages clause is to allow the restoration of the economic situation in which the applicant would have faded if the infringement had not taken place. Therefore, the damage must be a good faith and appropriate estimate of the damage resulting from the infringement and not an amount intended to sanction the other party or to force the performance of the contract.
The courts have a wide discretion in determining the merits of compensation, but it must not exceed the amount set out in the contract. If the amount agreed in a contract is a true forecast of the damage likely to be caused by an infringement, they are considered CDs. Any extravagant and excessive amount, exceeding the potential quantity of CDs that was foreseeable at the time of the conclusion of the contract, is considered a penalty clause. Although there is no specific formula for distinguishing penalties from LDs, the Tribunal may make subjective compensations taking into account the contractual terms and the merits of the amount claimed as damages. The author notes that the contract of sale must not contain, in accordance with the test prescribed by law, confirmation by the seller and the buyer that “the damages are impractical or extremely difficult to repair”, which has become common to support the assertion that the provision did not constitute a penalty under article 215 (A). However, it remains a common practice in Oklahoma purchase and sale agreements that such recitation is included in the lump sum damages clause, and it may be advantageous for both seller and buyer to choose to implement a lump sum of damages greater than 5% of the purchase price (in this case, the party: who wishes to maintain the provision, demonstrate its adequacy. . as noted above). . . .