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Liquidated damages, also referred to as liquidated and ascertained damages (LADs), [1] are damages whose amount the parties designate during the formation of a contract [2] for the injured party to collect as compensation upon a specific breach (e.g., late performance). [3] This is most applicable where the damages are intangible.
Under common law, a liquidated damages clause will not be enforced if the purpose of the term is solely to punish a breach (in this case it is termed penal damages). [23] The clause will be enforceable if it involves a genuine attempt to quantify a loss in advance and is a good faith estimate of economic loss.
Liquidated damages; Liquidated damages refer to a predetermined amount of money that must be paid by the breaching party, and they are fixed numbers agreed upon by both parties during the formation of a contract. Courts enforcing a liquidated damages provision would consider the reasonableness of its amount, specifically if it approximates the ...
Outside the oil and gas context, "take or pay" contract terms are often rejected by courts as unenforceable penalties. Courts look at these as "liquidated damages" clauses that must be based on a reasonable approximation of the actual damage that a party would suffer due to the other party's breach.
There are six classifications of damages which are compensatory, consequential, punitive, incidental, nominal and liquidated damages. [14] The objectives to fulfil the remedies is to make the plaintiff or suffering party not to suffer, the law allows several damages or compensation to cover the losses by the injured party.
This page was last edited on 27 July 2006, at 04:14 (UTC).; Text is available under the Creative Commons Attribution-ShareAlike 4.0 License; additional terms may ...
Other than pecuniary damages, which is the most common type of damages recovered, there are a few other recognizable types of damages under English law, and still others that have their validity subject to ongoing debate: Injured feelings and disappointment; Injured reputation; Speculative damages; Liquidated damages and penalty; Quantum meruit [4]
The essence of a penalty is a payment of money stipulated as in terrorem of the offending party; the essence of liquidated damages is a genuine covenanted pre-estimate of damage. It will be held to be penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be ...