Parties to a contract often try to negotiate the anticipated damages in the event of a breach of the contract.  Such clauses are referred to as liquidated damages clauses.

There are many reasons why parties include such clauses but often it's simply that each party acknowledges and agrees to their possible exposure or liability in the event of a breach of contract.

Such clauses are often enforceable in Colorado but there are circumstances in which a Colorado court might not enforce such a clause.

On their business law blog, the Boulder business attorneys of LaszloLaw discuss when liquidated damages clauses may not be held valid by a court in Colorado.