liquidated damages

The pre-agreed method of calculating damages in a contract, such that a judge is not required to make a formal assessment of damages or loss. The pre-estimate of damages must be a genuine estimate of the losses that will be sustained by the breach, otherwise the clause is deemed an unenforceable penalty.

Usage: The liquidated damages clause took effect in the event of late delivery.

Related Words: general damages; special damages; penalty clause; mitigation of damage; breach of contract; quantum meruit; remoteness of damage; contributory negligence; contract; assessment of damages; financial loss.

Useful Material:

1. Liquidated Damages Clauses and Penalties in Commercial Contracts