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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.
There are six classifications of damages which are compensatory, consequential, punitive, incidental, nominal and liquidated damages. [14] The objectives to fulfil the remedies is to make the plaintiff or suffering party not to suffer, the law allows several damages or compensation to cover the losses by the injured party.
Damages in the UK are the only [4] remedy available for breach of a warranty. [citation needed] Those damages can come in different forms such as an award of monetary damages, liquidation damages, specific performances, rescission, and restitution. [5] Damages are classified as being compensatory or punitive.
For example, a collateral contract is formed when one party pays the other party a certain sum for entry into another contract. A collateral contract may be between one of the parties and a third party. It can also be epitomized as follows: a collateral contract is one that induces a person to enter into a separate "primary" contract.
Liquidated damages; Liquidated damages refer to a predetermined amount of money that must be paid by the breaching party, and they are fixed numbers agreed upon by both parties during the formation of a contract. Courts enforcing a liquidated damages provision would consider the reasonableness of its amount, specifically if it approximates the ...
Liquidated damages are an estimate of loss agreed to in the contract, so that the court avoids calculating compensatory damages and the parties have greater certainty. Liquidated damages clauses may serve either a compensatory or a punitive purpose and, when aimed at the latter, may be referred to as "penalty clauses".