liquidated damages

(redirected from Unliquidated damages)
Also found in: Dictionary, Legal, Encyclopedia, Wikipedia.
Related to Unliquidated damages: unliquidated claim

Liquidated damages

The amount payable for delays and sub-standard performance under a construction, equipment supply, or Operations & Maintenance contract.

Liquidated Damages

In some contracts, a set fee that one party must pay the other in cases of breach of contract. The amount of the liquidated damages is stated in the contract and is designed to compensate the grieved party when valuation of the breach would be difficult to ascertain.

liquidated damages

Damages agreed upon in advance by contracting parties.The parties will recite that if one or the other breaches the contract, it will be difficult to determine damages at that time.This is often true in situations where construction is delayed and a business cannot open on time or homeowners cannot take possession of their home when anticipated. Liquidated damages are used in a wide variety of cases, though, not just construction contracts.The parties will agree to an amount of damages, or a method of calculating damages, such as a certain amount per day. Most real estate sale contracts stipulate the earnest money deposit as the amount of liquidated damages.The catch with this system is that courts will not enforce penalties, which are illegal.If the liquidated damages do not bear some relationship to reality and the probable damages suffered by the innocent party, then courts will recharacterize them as penalties (completely unenforceable) or will reduce them to an amount deemed reasonable under the circumstances.

References in periodicals archive ?
On appeal, the Second Circuit reversed, holding that the district judge could not attempt to predetermine the value of an unliquidated damages claim, and therefore federal diversity jurisdiction was proper.
18, 1992, TeleConcepts filed suit in Texas state court against Thermascan (although it has not yet served Thermascan), alleging breach of contract and seeking, among other relief, liquidated and unliquidated damages.
The Court reserves jurisdiction to enter an award of attorneys' fees, unliquidated damages upon proper showing thereof, and costs.
In Broward County, determining common law unliquidated damages for a violation of civil rights, a cause of action which did not exist at common law, was held to be a "purely judicial function.