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Liquidated Damages

What are Liquidated Damages?

Liguidated Damages are a specific amount of money, agreed upon by all parties to a contract, to be paid in the event that either party fails to perform its obligations by a scheduled completion date. Liquidated damage clauses are useful when the exact value of damages is difficult or impossible to determine. Construction contracts often include a liquidated damages provision for construction delays which specifies a daily rate to be paid for each day a project is delayed beyond the scheduled completion date.