Liquidated Damages

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When a breach of contract occurs, there must be a remedy of damages. This is the payment in one form or the other for a breach of contract by the breaching party, to the non-breaching party. There are various kinds of remedies, which include; Compensatory damages, Punitive damages, and Liquidated damages. In the law of contract, when a breach of contract occurs, the non-breaching party has to do all he/she can in order to minimize the damages caused by the breach. However, some contracts contain provisions that specify a certain sum of money that is payable by the breaching party incase he/she fails to perform his/her duties as required by the contract signed. This sum of money paid for a breach of contract is known as, liquidated damages. The liquidated damages payable after a breach of contract are based on a reasonable estimate of the value of the promised performance, in the breached contract. The identified parties of the contract always spell out liquidated damages earlier in a contract.
Damages are liquidated in a contract if; the amount is reasonable, and considers the anticipated harm caused by the contract breach, if there is difficulty in proving the loss, and if, there is a difficulty of finding another adequate remedy for the breach of contract. Secondly, damages in a contract are liquidated if the injury is uncertain or is difficult to quantify. In addition, the damages are supposed to be structured to function as damages, and not as a punishment. If the above is not met, a liquidated damage will be considered as null, and void.
On the other hand, liquidated damages may not apply after a breach of contract if the liquidated damages clause was not included in the formation, and before signing the contract. In addit...

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...entered into contract, in case there is a breach of contract.

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