Definition
Damages predetermined in a contract and agreed to in advance as compensation for breach, rather than calculated at trial. It's basically the parties saying 'if you breach, you owe me this amount.'
Example Usage
The construction contract included a liquidated damages clause requiring $10,000 per day for delays in completion.
Origin
From Latin 'liquidus,' meaning clear or settled
Fun Fact
Courts won't enforce liquidated damages if they're clearly punitive rather than a reasonable estimate of harm—it has to be an honest forecast, not a penalty.
Source: Contract law and remedies
Related Terms
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See “Liquidated Damages” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.
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