Liquidated Damages (LDs)
A pre-agreed sum payable by the contractor for each day of late completion. Because the figure is fixed in advance, the employer does not have to prove actual loss — which is the whole point of the mechanism.
LDs are a genuine agreement about the consequences of delay, not a penalty — and in most common-law jurisdictions that distinction is legally load-bearing. A sum set so high that it is punitive rather than a genuine pre-estimate of loss can be unenforceable. A sum set realistically almost never is.
The practical consequence for a contractor is that LDs run automatically. There is no argument to have about the employer’s actual loss, no invoice to dispute. They simply accrue, per day, until completion — which is why an extension of time is worth precisely the LD rate multiplied by the days granted, and why the notice that preserves the right to claim one is worth the same.
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