Mississippi courts generally have found liquidated damages provisions in contracts for the sale and purchase of commercial real estate to be enforceable. The law in this area, however, is muddied by two factors. First, the courts applying Mississippi law have not distinguished cases involving liquidated damages clauses in contracts for the sale and purchase of commercial real estate from cases involving contracts for sale and purchase of residential properties, lease purchase agreements, leases, construction contracts and even settlement agreements entered into in connection with divorce. Second, a court may determine not to enforce an otherwise valid liquidated damages clause if it would not be equitable to do so, which tends to shift the focus of the time for determining the reasonableness of the liquidated damages clause from the date of the contract to the date of breach.

Republished with permission. The full article for, "Liquidated Damages Clauses in Commercial Real Estate Contracts in Mississippi," was published in the September 2021 issue of ALI CLE’s The Practical Real Estate Lawyer.