What are liquidating damages?
Liquidating damages are the potential damages specified as the total amount of compensation in which the aggrieved party will be able to seek, if the other party involved breaches the contract. Liquidated damages are predetermined prior to entering the contract, and for it to be legally enforceable, the nature of the contract should be such that it is difficult to determine actual damages as well as reasonably foreseeable damages should they occur.
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