An employment contract may state the amount of liquidated damages to be paid if the contract is breached. Upon a party's breach, the other party will recover this amount of damages whether actual damages are more or less than the liquidated amount.
If the agreed-upon liquidated damage amount is unreasonable, the Court will hold the liquidated damage clause to be void as a penalty. If the Court declares the clause to be void, the employer would have to prove the actual damages.
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In the employment law context, liquidated damages are a statutory remedy for victims of certain unlawful employment discrimination or wage violations. Liquidated damages are a fixed amount defined by the statutes that authorize them, commonly equal to the plaintiff's back pay award.
Sample liquidated damages clause: In the event of delay in type of project completion, the performing party shall pay liquidated damages to the owner in the amount of dollar amount per day/week, etc. or "X" percent of the total contract price per day/week, etc..
A liquidated damages example would be a contractor that failed to complete a construction project on time and is charged daily until the project has been finished.
In order to determine a per diem liquidated damage amount, MWRA then divided each contract's proportionate share of the extended costs by an estimate of how long each contract would take to perform.
An example of this would be how a contract for a university dorm rental may state: Students who cancel their dormitory housing agreement after moving into their room shall pay liquidated damages amounting to $5.00/day for the remainder of the rental term (not to exceed $500.00).
