Performance criteria liquidating damages
One of the principle requirements of a liquidated damages clause is that it does not venture into the realm of a penalty – which would make that clause void and unenforceable. When dealing with contracts that contain liquidated damages clauses, it is important you consider the following: Are the damages a genuine, pre-agreed estimate (liquidated damages)? In Ringrow , the High Court reiterated the law separating penalties from liquidated damages.Facts BP sought to exercise an option to buy back a BP service station independently owned by Ringrow – following a discovery that Ringrow breached the contract by selling non-BP fuel.They are essentially a fixed sum that accrues to a party as a means of compensation following a breach of a contract.Most commonly they occur as a result of breach to deliver a good or service on time (i.e., late performance) however, liquidated damages can also be used for other breaches.(1) To represent itself as a small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, or women-owned small business concern, a concern must meet the appropriate definition (see 2.101 and 19.001).Limitations are placed at no more than 3% of the sales price (any excess money is to be returned to the buyer), and the property must be a single family dwelling of 1-4 units.
Thus, before knowing what exactly liquidated damages are, it is important to understand the consequences of breach of contract and the damages awarded in case of breach.
Timing is typically highly sensitive in the context of construction contracting.