Samson Sales, Inc. v. Honeywell, Inc. (1984), 12 Ohio St.3d 27, 465 N.E.2d 392 (syllabus) (holding that $50 cap on liability in burglar alarm contract was unenforceable); see also Midamco, L.P. v. Fashion Bug of Solon, Inc. (1996), 116 Ohio App.3d 854, 857-858, 689 N.E.2d 605 (collecting cases in which liquidated damages provisions were held unenforceable).

The party that seeks to benefit from a liquidated damages provision should obviously avoid using the term “penalty” to describe the damages. See, e.g., Wright v. Bassinger, Mahoning App. No. 01CA81, 2003-Ohio-2377 (holding that a liquidated damages provision that specified a five percent “penalty” was unenforceable). That party should also be able to demonstrate that the parties arrived at the method of calculating the amount of the specified damages in a reasonable manner. Id. at ¶20. It may also make sense to provide affirmatively in the contract (to the extent that circumstances permit) that actual damages would be uncertain as to amount and difficult of proof, that each party understands the liquidated damages provision and has had access to counsel in connection with reviewing and negotiating the terms of the contract, that the provision is the result of arm’s length negotiations, that the specified damages are “proportionate in amount compared to the value of services under” the contract (Republic Services of Ohio Hauling, L.L.C. v. Pepper Pike Properties, Inc., Cuyahoga App. No. 81525, 2003-Ohio-1348, at ¶41) and “proportional to the anticipated ‘harm’ from the ‘breach’ of the contract” (Westbrock v. W. Ohio Health Care Corp. (2000), 137 Ohio App.3d 304, 323, 738 N.E.2d 799), that the parties intend “to provide for liquidated damages in the specified amount” (Young v. Int’l Bhd. of Locomotive Engineers (1996), 114 Ohio App.3d 499, 509, 683 N.E.2d 420), and that the parties intend the damages to serve merely as compensation, and not as a penalty.