What principle governs the enforcement of pre-determined damages in a contract?

The principle that governs the enforcement of pre-determined damages in a contract is known as liquidated damages. This concept refers to specific amounts that are agreed upon by the parties to a contract in advance, intended to serve as compensation for breach of contract when actual damages may be difficult to quantify.

For liquidated damages to be enforceable under Texas law, they must meet certain criteria: the damages must be a reasonable estimate of the anticipated harm caused by a breach, and they cannot be considered a penalty. This principle allows parties to provide a clear and predetermined consequence for a breach, which can often simplify disputes and provide certainty in contractual relationships.

In contrast, promissory estoppel relates to situations where a party reasonably relies on a promise to their detriment, but does not involve pre-determined damages. The compensatory principle, while relevant in terms of the general damages awarded for breaches, does not specifically address the pre-determined aspect inherent in liquidated damages. Finally, equitable relief pertains to non-monetary remedies, such as injunctions or specific performance, rather than the pre-set monetary damages associated with a breach of contract.

Thus, liquidated damages are the correct answer as they specifically address the enforcement of pre-determined amounts meant to