{"id":12562,"date":"2018-10-01T16:36:53","date_gmt":"2018-10-01T16:36:53","guid":{"rendered":"https:\/\/examchum.uk\/?p=12562"},"modified":"2020-08-20T22:26:39","modified_gmt":"2020-08-20T22:26:39","slug":"liquidated-damages","status":"publish","type":"post","link":"https:\/\/examchum.uk\/landscape-architecture\/liquidated-damages\/","title":{"rendered":"What are Liquidated and Ascertained Damages?"},"content":{"rendered":"<p>[vc_row][vc_column][vc_column_text]<b>Liquidated damages<\/b>\u00a0(also referred to as liquidated and ascertained damages) are damages whose amount the parties designate during the formation of a\u00a0contract<sup id=\"cite_ref-Liquidated_1-0\" class=\"reference\"><\/sup>\u00a0for the injured party to collect as compensation upon a specific breach (e.g., late performance).<\/p>\n<p>In Common law, in order for a liquidated damages clause to be upheld, two conditions must be met.<\/p>\n<ul>\n<li>First, the amount of the damages identified must roughly approximate the damages likely to fall upon the party seeking the benefit of the term.<\/li>\n<li>Second, the damages must be sufficiently certain at the time the contract is made that such a clause will likely save both parties the future difficulty of estimating damages.<\/li>\n<\/ul>\n<p>[\/vc_column_text][vc_column_text css=&#8221;.vc_custom_1597962380683{border-bottom-width: 20px !important;padding-top: 20px !important;padding-right: 20px !important;padding-left: 20px !important;background-color: #f2f2f2 !important;}&#8221;]<\/p>\n<div class=\"title-h5\">Example<\/div>\n<p>Here&#8217;s a simple example of how the liquidated damages amount can be calculated. Let&#8217;s say that the project is the construction of a car parking area which will be used for commercial purposes, renting spaces to visiting drivers. For this example, we will assume the following:<\/p>\n<ol>\n<li>The car park&#8217;s capacity is 200 spaces.<\/li>\n<li>The hourly rate is \u00a31.<\/li>\n<li>It will be open for 10 hours per day.<\/li>\n<li>The car park operates 7 days a week and the charge rate is always the same.<\/li>\n<\/ol>\n<p>Loss of revenue for the Client on a daily basis if there was a breach of contract and the Contractor failed to deliver this project on the agreed completion date, would be worked out as per the following equation:<\/p>\n<p style=\"text-align: center;\">Daily loss of revenue = (number of spaces) x (hourly rate) x (operating hours)<\/p>\n<p><em>* Please note that the above formula cannot be used as a generic rule of thumb on every calculation. It is up to the Client to inform the Contract Administrator of the amount that he&#8217;d like to be used for liquidated damages, based on the Client&#8217;s calculations.<\/em><\/p>\n<p>So for the example above, the amount will be: Daily loss of revenue = 200 x 1 x 10 = \u00a32,000 per day (or \u00a314,000 per week maximum). This represents a rough estimation of the potential maximum daily\/weekly revenue loss, however this would not necessarily be the amount that would be set as the penalty for late hand over.<\/p>\n<p>&nbsp;[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]<\/p>\n<h5>READ MORE<\/h5>\n<ul>\n<li><a href=\"https:\/\/en.wikipedia.org\/wiki\/Liquidated_damages\" target=\"_blank\" rel=\"noopener noreferrer\">Liquidated damages (Wikipedia)<\/a><\/li>\n<li><a href=\"https:\/\/uk.practicallaw.thomsonreuters.com\/7-107-6769?transitionType=Default&amp;contextData=(sc.Default)&amp;firstPage=true&amp;comp=pluk&amp;bhcp=1\" target=\"_blank\" rel=\"noopener noreferrer\">Liquidated damages (Practical Law)<\/a><\/li>\n<\/ul>\n<p>[\/vc_column_text][\/vc_column][\/vc_row]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Liquidated damages\u00a0are damages whose amount the parties designate during the formation of a\u00a0contract\u00a0for the injured party to collect as compensation upon a specific breach (e.g., late performance).<\/p>\n","protected":false},"author":1,"featured_media":11090,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[153,20],"tags":[624,442,423,623,115,411,566],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What are Liquidated and Ascertained Damages? 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