A liquidated damages clause in a construction contract will most likely be unenforceable if:
Explanation
Civil Code §1671(b) makes a liquidated damages provision valid unless the party challenging it proves the provision was unreasonable under the circumstances existing at the time the contract was made. A figure set to punish, unrelated to any harm the parties could foresee, is exactly that. The other three cut the other way: a reasonable forecast of the owner's loss is what the statute asks for, damages that were hard to quantify at signing are the classic reason to liquidate them in advance, and arm's-length bargaining with counsel makes the clause harder to attack, not easier.
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