Liquidated Damages

Liquidated damages are a predetermined dollar amount payable on breach, fixed in the contract instead of calculated after the fact. Brands use liquidated-damages clauses when actual damages from an athlete breach would be hard to prove — for example, the reputational harm from a missed appearance, or the loss of category exclusivity. To be enforceable in most U.S. jurisdictions, the liquidated amount must be a reasonable forecast of actual harm at the time the contract was signed, not a penalty. Courts strike penalty clauses; they enforce genuine pre-estimates of damages. Athletes should push to cap liquidated damages at compensation actually received under the deal, exclude excusable absences (force majeure, school-mandated travel, illness), and require the brand to demonstrate the calculation method.