Difference between Liquidated and Unliquidated Damages
Basis |
Liquidated Damages |
Unliquidated Damages |
---|---|---|
Meaning |
Liquidated damages are the pre-agreed damages that the party breaking the contract pays to the person who was wronged. |
Unliquidated damages are those that are not pre-agreed upon, meaning that the court determines them after the contract has been broken. |
Section |
Covered under Section 74 of the Indian Contract Act, 1872. |
Covered under Section 73 of the Indian Contract Act, 1872. |
Proof of Loss |
Under liquidated damages, there is no requirement for proof of loss on the plaintiff in order to make a valid claim. |
Under unliquidated damages, proof of loss is a pre-requisite in order to make a valid claim, and the onus is on the plaintiff. |
Amount of Damages |
The amount of loss is not fixed under liquidated damages. |
Under unliquidated damages, the amount of loss is not fixed, and the judiciary decides the appropriate amount. |
Claim of Contract |
In the event of a specific violation, the party that was wronged by the contract may get liquidated damages. |
For unanticipated damages, claims are made for unliquidated damages. |
Difference between Liquidated and Unliquidated Damages
Liquidated damages and Unliquidated damages are the two kinds of damage. Liquidated damages are pre-agreed compensation for contract breaches, while Unliquidated damages are determined by courts after a breach. When a defendant breaches a contract, the damaged party is often awarded the amount necessary to put them back in the financial situation they were expecting. But the only thing that sets one type apart from the other is the method used to determine the amount payable.
Understanding the distinction between these two types of damages is crucial in contractual agreements and legal disputes.
Table of Content
- What are Liquidated Damages?
- What are Unliquidated Damages?
- Difference between Liquidated and Unliquidated Damages
- Conclusion
- Difference Between Liquidated and Unliquidated Damages- FAQs