A liquidated damages clause is a contractually-agreed upon amount of damages to be paid in the event of default or breach.

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A liquidated damages clause is a provision in a contract that specifies a predetermined amount of money that must be paid as damages in the event of a breach or default by one of the parties. The purpose of the clause is to provide certainty and predictability to both parties in the event of a dispute, and to avoid the need for costly litigation over damages. The amount of damages specified in the clause must be a reasonable estimate of the harm that would be caused by the breach or default, and not a penalty.

A Liquidated Damages Clause Is a Contractually-Agreed Upon Amount of Damages