Define: Liquidated Damages

UK Accounting Glossary

Definition: Liquidated Damages



What is the dictionary definition of Liquidated Damages?

Dictionary Definition


An amount owed to a plaintiff in a lawsuit by the defendant that is determined by operation of law, such as the unpaid amount in a breach of contract.


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Full Definition of Liquidated Damages


Liquidated damages are a payment agreed to by the parties of a contract to satisfy portions of the agreement which were not performed. In some cases liquidated damages may be the forfeiture of a deposit or a down payment, or liquidated damages may be a percentage of the value of the contract, based on the percentage of work uncompleted. Liquidated damages are often paid in lieu of a lawsuit, although court action may be required in many cases where liquidated damages are sought. Liquidated damages, as opposed to a penalty, are sometimes paid when there is uncertainty as to the actual monetary loss involved. The payment of liquidated damages relieves the party in breech of a contract of the obligation to perform the balance of the contract.


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Liquidated Damages. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/liquidated-damages/ (accessed: March 28, 2020).
American Psychological Association (APA):
Liquidated Damages. PayrollHeaven.com. Retrieved March 28, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/liquidated-damages/

Definition Sources


Definitions for Liquidated Damages are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 10th February 2020.