Liquidated damages
A predetermined amount of money that must be paid as damages for failure to perform under a contract.
Liquidated damages provide a clear, agreed-upon measure of compensation for breaches, particularly for delays. This helps avoid lengthy disputes over actual damages and incentivizes timely project completion, but the amounts must be reasonable and reflective of potential losses.
Used in a sentence
We're approaching the deadline, and liquidated damages will apply if we don't finish on time.
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