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Explains what liquidated damages are and the requirements for a liquidated damages clause, and when it will be classed as a penalty clause.
Liquidated damages - or LADs - are a sum of money stated in a contract as 'the damages payable in event of a special breach'. Liquidated damages must be a genuine pre-estimate of the loss that is likely to be suffered by the Employer/Contractor, if the works are not completed on time.
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