In a recent case, lenders lent $1.8 million to borrowers, who defaulted. The parties settled all contractual and other claims for $2.1 million. The parties also executed a stipulation for entry of judgment which the lender could file ex parte in the event of any failure by the borrower to timely cure any non-payment. However, this stipulation also stated that in the event of default, the borrowers would be liable to pay $2.8 million plus interest to the lender. The California appellate court found that $700,000, which corresponded to six months’ interest on the entire principal loan, bore no reasonable relationship to the range of actual damages the parties could have anticipated from a breach of the settlement agreement and was thus unenforceable.