12 May 2008
Liquidated damages
Liquidated damages are commonly found in IT contracts and when used appropriately, they can be a useful way of managing risk and pre-determining the amount of damages payable for certain types of contractual breach.
This article explains some basic principles of liquidated damages provisions (with a focus on their use and application in IT contracts), outlines the advantages of using such provisions and suggests ways to avoid drafting penalty provisions which will be unenforceable.