A sum of money the contractor agrees to pay the owner, typically for each day the contractor completes the project late. For example, a contractor pays the owner of an office building $1,000 per day for every day the office building is completed after the contractual completion date. The amount cannot be so great that it would be considered a penalty. Liquidated Damages are typically accompanied by an equal and opposite Early Completion Bonus.
Liquidated Damages are pre-determined monetary penalties specified in a contract, imposed on a party for failing to meet contractual obligations or deadlines. In construction, Liquidated Damages are used to compensate the project owner for delays or other issues caused by the contractor's failure to complete work on time. The amount is typically agreed upon in advance and is intended to cover the estimated losses or inconveniences resulting from the breach.
Pre-agreed compensation for delays in project completion.
