The Law Dictionary

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LIQUIDATED DAMAGES Definition & Legal Meaning

Definition & Citations:

Cash compensation, agreed to by signed, written contract for breach of contract, payable to the aggrieved party. The contract succinctly specifies what actions, or omissions, constitute a breach. To be legally enforceable, the contract’s nature makes damages circumstantially reasonable and difficult to determine. Otherwise, a court could interpret the specified amount as a fine, being in the contract primarily to force proper performance, and not to compensate injury. Under these conditions, the court views damages as ‘unliquidated’ to be assigned by the court based on the case’s merits alone.


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