Breach of Contract Law
Liquidated Damages
A pre-agreed amount specified in a contract as compensation payable if a particular breach occurs, meant to avoid disputes over the exact loss suffered.
Contracts often specify a liquidated damages clause upfront — a genuine pre-estimate of loss likely to result from a specific breach — so the parties don't need to separately prove the exact quantum of loss if that breach actually occurs.
Courts can still scrutinise whether the amount named is a genuine pre-estimate of loss or, effectively, an unreasonable penalty, and can award only reasonable compensation regardless of the figure stated.
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