A liquidated damages clause is one that provides in advance that a breaching defendant will pay "a specific amount for a specific breach." Jameson Realty Grp. v. Kostiner , 351 Ill.App.3d 416, 286 Ill.Dec. 431, 813 N.E.2d 1124, 1131 (2004). The purpose of such a clause "is to provide parties with a reasonable predetermined damages amount where actual damages may be difficult to ascertain."

“It is a general rule of contract law that, for reasons of public policy, a liquidated damages clause that operates as a penalty for nonperformance or as a threat to secure performance will not be enforced.” Jameson Realty Group v. Kostiner, 351 Ill.App.3d 416, 423, 286 Ill.Dec. 431, 813 N.E.2d 1124 (2004) (citing Med+Plus Neck & Back Pain Center v. Noffsinger, 311 Ill.App.3d 853, 860, 244 Ill.Dec. 712, 726 N.E.2d 687 (2000); and Grossinger Motorcorp, Inc. v. American National Bank & Trust Co., 240 Ill.App.3d 737, 749, 180 Ill.Dec. 824, 607 N.E.2d 1337 (1992)). In doubtful cases, we are inclined to construe the stipulated sum as a penalty.

In one order, the court denied Bear Valley's motion for partial summary judgment as to McDonald's and granted McDonald's motion for summary judgment as to counts I through IV of the amended complaint. Specifically, with respect to count I, the trial court examined the three factors outlined in Jameson Realty Group v. Kostner, 351 Ill.App.3d 416 (2004), and concluded that section 4(G) of the Ground Lease was a valid and enforceable liquidated damages clause. Concerning count II, the court agreed with McDonald's that the Ground Lease was "subject and subordinate" only to the First COREA Amendment, and that there was no language to support Bear Valley's argument that the Ground Lease was subordinate to all future amendments to the COREA. With respect to counts III and IV, the court examined the Ground Lease and concluded that, although it imposed certain obligations on the owner of Lot 2, nothing actually required Dial to acquire or purchase Lot 2.

In Illinois, a liquidated damages clause is enforceable as long as (1) the parties intended to agree in advance to the settlement of damages that might arise from a breach, (2) the amount provided as liquidated damages was reasonable at the time of contracting, bearing some relation to the damages which might be sustained, and (3) the actual damages would be uncertain in amount and difficult to prove. Jameson Realty Group v. Kostiner, 351 Ill. App. 3d 416, 423 (2004); Curtin v. Ogborn, 75 Ill. App. 3d 549, 554-55 (1979). There is no fixed rule applicable to all liquidated damages agreements, and each must be evaluated on its own facts and circumstances.

"The two fundamental elements of laches are (1) a lack of due diligence by the party asserting the claim and (2) prejudice to the opposing party." Jameson Realty Grp. v. Kostiner, 813 N.E.2d 1124, 1137 (Ill. App. Ct. 2004). ¶19 Lawson suffered no prejudice and, as a result, its laches claim fails.

Although parties to a contract may agree in advance to "liquidated" damages as an estimate of the damages that might be sustained in the event of breach, "a liquidated damages clause which operates as a penalty for nonperformance or as a threat to secure performance will not be enforced." Jameson Realty Group v. Kostiner, 351 Ill.App.3d 416, 423 (2004); see also Penske Truck Leasing Co., L.P. v. Chemetco, Inc., 311 Ill.App.3d 447, 454 (2000) (" 'A term fixing unreasonably large liquidated damages is unenforceable on grounds of public policy as a penalty.' ") (quoting Restatement (Second) of Contracts § 356 (1979)). Such a clause is enforceable only if: "(1) the parties intended to agree in advance to the settlement of damages that might arise from the breach; (2) the amount of liquidated damages was reasonable at the time of

The law provides that "[w]here the terms of an agreement are unambiguous, the parties' intent must be determined solely from the language of the agreement itself, and it is presumed that the parties inserted each provision deliberately and for a purpose." Jameson Realty Group v. Kostiner, 351 Ill. App. 3d 416, 426 (2004). However, courts will not enforce a liquidated damages provision that operates as a penalty for nonperformance or as a threat to secure performance because such a provision violates public policy.

No fixed rule applies to all liquidated damages provisions, and courts must evaluate each one on its own facts and circumstances. Jameson Realty Group v. Kostiner, 351 Ill. App. 3d 416, 423 (2004). In general, under Illinois law a liquidated damages provision is "valid and enforceable in a real estate contract, when: (1) the parties intended to agree in advance to the settlement of damages that might arise from the breach; (2) the amount of liquidated damages was reasonable at the time of contracting, bearing some relation to the damages which might be sustained; and (3) actual damages would be uncertain in amount and difficult to prove."

Where a liquidated damages provision is clear and unambiguous on its face, "the parties' intent must be determined solely from the language of the agreement itself, and it is presumed that the parties inserted each provision deliberately and for purpose." Jameson Realty Group v. Kostiner, 813 N.E.2d 1124, 1133 (Ill. App. Ct. 2004). The key contractual provisions, recited above, clearly and unambiguously state that "Seller shall receive the entire Earnest Money Deposit and all accrued interest thereon as complete liquidated damages."

Under Illinois law, "for reasons of public policy, a liquidated damages clause which operates as a penalty for nonperformance or as a threat to secure performance will not be enforced." Jameson Realty Grp. v. Kostiner, 351 Ill. App. 3d 416, 423 (2004) (holding "[d]amages for breach by either party may be liquidated in the agreement but only at an amount that is reasonable in the light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss"); Lake River Corp. v. Carborundum Co., 769 F.2d 1284, 1290 (7th Cir. 1985) (holding that a liquidated damages clause was an unenforceable penalty because the damages calculation was "invariant to the gravity of the breach"); Nat'l City Healthcare Fin. v. Refine 360, LLC, 607 F.Supp. 2d 881, 884 (N.D.Ill. 2009) (holding that a liquidated damages provision was a penalty because it always provided for more than actual damages); Grossinger Motorcorp, Inc. v. Am. Nat. Bank & Trust Co., 240 Ill. App. 3d 737, 752 (1992) (holding that an optional liquidated damages provision was unenforceable because it operated only when liquidated damages exceeded actual damages). Section 15 of the Contract provides that "if Officemax terminates this Agreement, [NHS] shall pay to