On December 3, 1990, Vanderbilt University (Vanderbilt) (plaintiff) hired Gerry DiNardo (defendant) as its head football coach for a period of five years. The employment contract stated that the five-year period was of essence to the contract and essential to the stability of Vanderbilt’s football program. Thus, the contract provided that if DiNardo resigned from his position during the contract period and began employment for another institution, he would pay Vanderbilt liquidated damages equal to his net salary for the time remaining in his contract. Prior to the expiration of the five-year period, the parties signed an addendum extending the term of the contract by two years. On December 12, 1994, DiNardo decided to accept a coaching position at Louisiana State University. Vanderbilt demanded that DiNardo pay liquidated damages for the one remaining year under the original contract and two remaining years under the addendum. DiNardo did not pay this amount. Vanderbilt sued DiNardo for breach of contract. Both parties moved for summary judgment. The district court found that the liquidated-damages provision and the addendum were enforceable and entered judgment in favor of Vanderbilt. DiNardo appealed.