Definition of Liquidated damages:
Liquidated damages are presented in certain legal contracts as an estimate of otherwise intangible or hard-to-define losses to one of the parties. It is a provision that allows for the payment of a specified sum should one of the parties be in breach of contract.
Sum of money (agreed-to and written into a contract) specified as the total amount of compensation an aggrieved party should get, if the other party breaches certain part(s) of the contract. The contract also establishes what actions or failures to act constitute a breach. For the agreement to be legally enforceable, the nature of the contract should be such that it is difficult to determine actual damages, and the amount of damages should be reasonable under the circumstances. Otherwise law may regard the specified amount as a fine (included in the contract primarily to force its proper performance) and not a compensation for injury. In such cases, the damages are deemed unliquidated damages and are assessed by a court according to the merits of the case.
Liquidated damages are meant as a fair representation of losses in situations where actual damages are difficult to ascertain. In general, liquidated damages are meant to be fair, rather than punitive.
How to use Liquidated damages in a sentence?
- The courts typically require that the parties involved make the most reasonable assessment possible for the liquidated damages clause at the time the contract is signed.
- The firm was compensated adequately for the accident in the form of liquidated damages so all partys were happy in the end.
- Liquidated damages are presented in certain legal contracts as an estimate of otherwise intangible or hard-to-define losses to one of the parties.
- Liquidated damages are meant as a fair representation of losses in situations where actual damages are difficult to ascertain.
- I was required to receive liquidated damages from the company because I had suffered a great loss at their hand.
- The contract for the business partners included liquidated damages to compensate either party should one default on their initial agreement.
Meaning of Liquidated damages & Liquidated damages Definition