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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.
The language of real estate contracts is typically written to protect buyers. And in many cases, a home seller who reneges on a purchase contract can be sued for breach of contract.
Treble damages are usually a multiple of, rather than an addition to, actual damages, but on occasion they are additive, as in California Civil Code § 1719. When such damages are multiplicative and a person received an award of $100 for an injury, a court applying treble damages would raise the award to $300.
The amount of statutory damages can be set on a per-incident basis, such as in the Fair Debt Collection Practices Act, which gives statutory damages of up to $1,000 for a violation of its provisions. [2] Amounts could also be set per day, as in acts proscribing human-rights violations which might specify damages of $1,000 per day. [3]
However, Matt breached the contract. Reliance damages protect a party's reliance interest. Neal spent $100 in reliance on the contract, which constituted Neal's reliance interest. Since reliance damages equal to the value of the reliance interest of the injured party, Matt owes Neal $100.
If John's Landscaping breaks the contract, and Neal is forced to hire another service for $60 an hour, expectation (direct) damages paid to Neal would equal $100 ($10 an hour, the difference in price between the original contract and the new contract).
Parties may contract for liquidated damages to be paid upon a breach of the contract by one of the parties. 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 type of claim giving rise to the damages, such as whether it is a breach of contract action or tort claim, can affect the rules or calculations associated with a given type of damages. [3] For example, consequential damages are a potential type of expectation damages that arise in contract law.