What is damage clause?
Damage clause is a very effective means by which you can recover the loss that has occurred due to breach of the agreement. Generally these clauses are found in situations that are ever changing and therefore the damages that may occur are hard to determine before they actually occur. These clauses are generally the part of transactions that take place in real estate. The terms of the contract are determined and if one fails to abide by the terms the parties agree to pay a specific amount to the other signing party.
Benefit of signing the damages clause
The benefit of signing the damages clause goes to all the parties signing it. It is actually a kind of insurance for both the parties. Both the parties are aware of the fact that a definite sum must be ready with them if at all they are to break the agreement.
The other party that has suffered the loss can also get an opportunity to assess their losses and then determine the amount that will compensate for the same.
The matter can be solved without having to file time consuming court case which is a very expensive way out for both the parties.
The purpose of damage clause
The purpose of damage clause in no way is to punish the party that has breached the agreement, instead it for the welfare of the party that suffered the loss due to the breach of agreement by getting the monetary compensation to the party at loss.