Liquidated damages are financial compensation for a breach of contract, capable of calculation by mere arithmetic and capable of being assessed before there is a breach. They are agreed damages calculated before or after time the contract is made.
They must be a genuine pre-estimate at the time the contract is made of the likely losses resulting from the breach. They are distinguishable from a penalty, which is not a genuine pre-estimate of loss but is put there to frighten the contractor into completing on time. Penalties are void and not enforceable. Liquidated damages are claimable without proof of loss and they are enforceable even if there is no loss in question.
