Liquidated Damages - Definition - Law Dictionary Home Dictionary Definition liquidated-damages

Definition :

Liquidated damages, the amount agreed upon by a party to a contract to be paid as compensation for the breach of it, and intended to be recovered, whether the actual damages sustained by the breach be more or less, in contradistinction to a penalty; which is only the maximum amount agreed to be paid, and is intended to be reducible in proportion to the actual damage sustained. See Kemble v. Farren, (1829) 6 Bing 141; Lord Elphinstone v. Monkland Iron Co., (1886) 11 App Cas 332; Diestel v. Stevenson, (1906) 2 KB 345. See DAMAGES; PENALTY.