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Civil law

In the U.S. state of Louisiana, which follows a civil law system, liquidated damages are referred to as "stipulated damages". Prior to 1 January 1985, Louisiana law used the term “penal clause” under former article 2117 of the Civil Code. Stipulated damages create a secondary obligation for the purpose of enforcing the principal obligation. The aggrieved party may demand either the stipulated damages or performance of the principal obligation, but may not demand both except for delay. Stipulated damages may not be modified by the court (and will therefore be enforced) "unless they are so manifestly unreasonable as to be contrary to public policy".