Liquidated Damages
A pre-agreed amount the breaching party must pay if a specified breach occurs, typically used when actual damages would be difficult to calculate.
What it means
Liquidated-damages clauses fix damages in advance for specified breaches. Courts enforce them as long as the amount is a reasonable estimate of anticipated harm and actual damages would have been difficult to measure. If the stipulated amount is grossly disproportionate to foreseeable loss, courts treat it as an unenforceable penalty. They are common in real-estate, construction, and SLA contexts.