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Allied Informatics Inc. v. Yeruva

The liquidated damages clause of the parties' employment contract was unenforceable because the damages for breach were not difficult to calculate and the stipulated sums were not reasonable pre-estimates of the probable loss.

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The issue on appeal is whether the trial court erred by concluding that a nonsolicit covenant and various liquidated damages provisions in an employment contract were unenforceable. We discern no error and affirm.

Sairam Yeruva entered into an employment contract with Allied Informatics, Inc. “Allied” on February 20, 1998. Under the contract, Yeruva was to provide computer consulting services to Allied and its clients. The contract contained a nonsolicit covenant and several liquidated damages provisions in the event of a breach. Yeruva also signed a separate document reiterating the nonsolicit covenant. The relevant provisions of the employment contract are as follows:

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