Liquidated Damages
Category: Legal
Definition (plain English)
A pre-agreed amount payable for a specified breach, such as late delivery, failed performance, or missed service levels, where enforceable.
Why it matters commercially
Liquidated damages can make delay or quality risk commercially explicit, but poor drafting can create unenforceable penalties or margin-destroying exposure.
Example
A buyer required liquidated damages for late private-label launch stock, so the supplier priced the risk and negotiated a capped liability.
Common mistake
Adding a damages number without tying it to a real loss estimate, cap, grace period, evidence requirement, and local enforceability review.
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