Damages
Monetary compensation awarded to a party who has suffered loss or injury due to another party's breach.
Damages come in several forms: compensatory (covering actual losses), consequential (covering indirect losses), liquidated (pre-agreed amounts), and punitive (punishing egregious behavior). Most contracts focus on compensatory and liquidated damages.
Liquidated damages clauses set a predetermined amount payable upon breach, saving the need to prove actual loss in court. They must be reasonable estimates of anticipated harm to be enforceable.
Example
A construction contract specifies $500 per day in liquidated damages for each day the project extends beyond the agreed completion date.
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