Liquidated Damages Clause Is an Unenforceable Penalty

What Happened: There was no dispute that a Chicago hair lice removal salon that stopped paying its nearly $5,000 monthly rent was in default under the lease. The issue was whether the landlord could enforce the lease clause granting it 27 months of future rent as liquidated damages. The lower court ruled that the clause was enforceable, and the tenant appealed.

Ruling: The Illinois appeal court reversed, finding the liquidated damages clause void as a matter of public policy.