liquidated damages

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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 ?
The liquidated damages amount is often calculated as a percentage of the firm's historical annual billings to such lost clients for the year preceding the partner's departure, and it is triggered if the departing partner or the firm services the clients taken during the two-year period after the partner leaves the firm.
Specifically, I recommend that we adopt and implement a model similar to the liquidated damages provision in the Age Discrimination in Employment Act (ADEA) (226) and Fair Labor Standards Act (FLSA) (227) as part of Title VII in place of the current system.
Therefore, liquidated damages should be a reasonable estimate of actual damages.
Third, liquidated damages are an enforceable remedy only where actual damages are difficult or impossible to calculate.
There is no showing that liquidated damages were not collected as a result of the failure to include such provision in the contracts,' Reyes argued, adding that prosecutors even failed to show any delays in the projects.
The Court upheld the liquidated damages clause and did not reduce the sum;
The settlement agreement allocated $60,000 to liquidated damages (damages for the intangible effects of discrimination) and $60,000 to non-liquidated damages (other damages including back pay).
DFNN brought the case to court and obtained a favorable ruling but the arbitral award was at first too meager at only P27 million in liquidated damages.
The Contractor therefore agrees to pay, and the Owner agrees to accept, as liquidated damages and not as a penalty, the sum of $250.