Originally Posted by SweetT

Brian....

While most of your points are valid I think they are not on target in this case. First, projecting revenues "to the street" is not grounds for damages so no court is going to honor that as a legitimate proof of damages.

I meant that only as an explanation as to why a company might write a clause like that into the contract. Not as a way to justify damages

In the first term of a contract the company has many expenses that it plans to recoup during the course of the contract and hope to make a little money too. Like you said above, if the customer just ups and cancels for no reason then it stands to cause "damage" to the company for all of the money that was invested in the contract and the company has a right to sue for "damages". The official term is "liquidated damages". The contract term that we are discussing in this thread was fulfilled not once, not twice, but three times through the auto-renewal phase and, according to the customer, no more money was invested in hardware on this account prior to the original contract execution. Any judge with half common sense is going to look at this and call the damages that the company is suing for "punitive" and not "liquidated". Punitive damages in most states are not allowed in contract disputes...I know Georgia is one....not sure about California.

Again, let me reiterate....it is fun pretending to be a lawyer but Boneprone (the OP) should absolutely not take my advice and should speak directly to an attorney to decide what is best for his specific case.


--T