Practical Law Glossary Item 2-501-9324 (Approx. 2 pages)
Glossary
Liquidated Damages Clause
A contractual provision requiring a party in breach to pay a pre-determined amount to the other party as compensation for the breaching party's failure to perform a specific task or comply with a particular duty or obligation. Parties typically negotiate a liquidated damages provision into a contract where it may be difficult to either:
Determine the actual value of services to be performed.
Estimate the damages that a non-breaching party may suffer if a specific term is breached.