Okuzeka
Contract & Commercial Law vocabulary · Breach & Remedies

Liquidated damages

Meaning in contract & commercial law, with examples

nounCommon term

In contract & commercial law, liquidated damages means: A fixed sum agreed in the contract that one party will pay if a specific breach occurs, most often late completion or late delivery.

In Turkish: götürü tazminat, önceden belirlenmiş tazminat, cezai şart

How it is used

Typical in construction, supply and IT projects, for example '0.5% of the price for each week of delay'. Often shortened to 'LDs'. English courts will not enforce a clause that is really a penalty, meaning out of all proportion to the innocent party's legitimate interest.

Example sentences

  1. The contractor must pay liquidated damages of €5,000 for every day of delay.

  2. Liquidated damages are capped at 10% of the contract price.

Common collocations

  • pay liquidated damages
  • liquidated damages clause
  • delay liquidated damages
  • cap on liquidated damages
  • damagesMoney that a court or tribunal orders one party to pay another as compensation for loss caused by a breach of contract or another legal wrong.
  • breach of contractFailure by a party to do what it promised in a contract, for example paying late, delivering faulty goods or not delivering at all.
  • remedyA way the law helps a party whose rights have been breached, such as damages, specific performance, an injunction or termination.
  • limitation of liabilityA contract clause that caps or restricts the amount or the types of loss a party must pay for if something goes wrong.

More terms: Breach & Remedies

Practise with graded reading

Reading at the right level is the fastest way to make new words stick. Pick free English books by level:

This page explains English vocabulary for learners. It is not legal advice.