Liquidated Damages (LD)

Rather than argue over actual losses after a breach, the parties agree in advance a fixed amount — often a percentage of the contract value per day or week of delay — that becomes payable if the supplier misses a milestone. This gives certainty to both sides and a clear incentive for the supplier to perform on time.

To be enforceable, liquidated damages must be a genuine pre-estimate of likely loss, not a penalty designed purely to punish. They are common in construction, equipment supply and project contracts where late delivery causes measurable knock-on costs, and the LD clause should specify the rate, any cap and the triggering events precisely.