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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.
Incidental damages are the expenses reasonably incurred by a non-breaching party in order to avoid further consequential or direct damages that result from the breach of contract. For example, following the breach of a contract for employment, incidental damages could include the cost incurred by the former employee to find another job. [6]
The filing of a declaratory judgment lawsuit can follow the sending by one party of a cease-and-desist letter to another party. [6] A party contemplating sending such a letter risks that the recipient, or a party related to the recipient (i.e. such as a customer or supplier), may file for a declaratory judgment in their own jurisdiction, or sue for minor damages in the law of unjustified threats.
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".
Penal damages are liquidated damages which exceed reasonable compensatory damages, making them invalid under common law.While liquidated damage clauses set a pre-agreed value on the expected loss to one party if the other party were to breach the contract, penal damages go further and seek to penalise the breaching party beyond the reasonable losses from the breach. [1]
Special damages compensate the claimant for the quantifiable monetary losses he has suffered. [13] For example, extra costs, repair or replacement of damaged property, lost earnings (both historically and in the future), loss of irreplaceable items, additional domestic costs, and so on. [14] They are seen in both personal and commercial actions.
The type of claim giving rise to the damages, such as whether it is a breach of contract action or tort claim, can affect the rules or calculations associated with a given type of damages. [3] For example, consequential damages are a potential type of expectation damages that arise in contract law.