a stipulated contractual amount that the parties agree is a reasonable estimation of the damages owing to one in the event of a breach by the other.
EXAMPLE:
Safety Corporation and Fire Prevention, Inc., enter into a long-term contract whereby Fire Prevention supplies Safety with all the sprinkler systems Safety needs. Instead of leaving a damage figure to a courtdecision if either party should breach the agreement, the parties include a liquidated damages clause in the contract. That clause provides both a dollar figure and a formula for calculating damages with the higher of the two figures constituting the maximum damages either party could charge.
Congratulations! You're now booked up on what Liquidated Damages means!
You'll probably need to reference a legal glossary during your pursuit of justice.
