Liquidated Damages Clause

This Liquidated Damages Clause includes two options for liquidated damages which are to be paid by one party to the other if certain specified events (such as a delay or default) occur. The first option provides for a fixed sum to be paid at fixed intervals for the duration of the delay or default, with an optional total cap. The second option bases the liquidated damages on a percentage of the sums payable under the agreement (e.g., the fees).

It is important to note that liquidated damages should be used with care and if a liquidated damages clause is deemed to amount to a penalty, it will not be enforceable.

This template clause can be used in the drafting of a new contract or to amend or improve an existing one.

Optional text is enclosed in square brackets. These should be read carefully and selected so as to be compatible with one another. Unused options should be removed from the document.

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