Legal Dictionary of Pakistan
Quick lookup for English, Urdu, and Latin legal terms used in Pakistani jurisprudence.
liquidated damages
An amount contractually stipulated as a reasonable estimation of actual damages to be recovered by one party if the other party breaches. ( If the parties to a contract have agreed on liquidated damages, the sum fixed is the measure of damages for a breach, whether it exceeds or falls short of the actual damages. - Also termed stipulated damages; estimated damages. See LIQUIDATED-DAMAGES CLAUSE. Cf. unliquidated damages; PENALTY CLAUSE. "Where the terms of a contract specify a sum payable for non-performance, it is a question of construction whether this sum is to be treated as a penalty or as liquidated damages. The difference in effect is this: The amount recoverable in case of a penalty is not the sum named,but the damage actually incurred. The amount recoverable as liquidated damages is the sum named as such. In construing these terms a judge will not accept the phraseology of the parties; they may call the sum specified 'liquidated damages,' but if the judge finds it to be a penalty, he will treat it as such." William R. Anson, Principles of the Law of Contract 470 (Arthur L. Corbin ed., 3d Am. ed. 1919). "The distinction between a penalty and genuine liquidated damages, as they are called, is not always easy to apply, but the Courts have made the task simpler by laying down certain guiding principles. In the first place, if the sum payable is so large as to be far in excess of the probable damage on breach, it is almost certainly a penalty. Secondly, if the same sum is expressed to be payable on any one of a number of different breaches of varying importance, it is again probably a penalty, because it is extremely unlikely that the same damage would be caused by these varying breaches. Thirdly, where a sum is expressed to be payable on a certain date, and a further sum in the event of default being made, this latter sum is prima facie a penalty, because mere delay in payment is unlikely to cause damage. Finally, it is to be noted that the mere use of the words 'liquidated damages' is not decisive, for it is the task of the Court and not of the parties to decide the true nature of the sum payable." P.S. Atiyah, An Introduction to the Law of Contract 316-17 (3d ed. 1981).
unliquidated damages
Damages that have been established by a verdict or award but cannot be determined by a fixed formula, so they are left to the discretion of the judge or jury. Cf. liquidated damages.