Question

Liquidated damages are intended to represent anticipated losses to the owner based upon circumstances existing at the time the contract was made. List at least five types of potential losses to the owner that would qualify for determination of such potential losses.

Answer 1

Answer:

1. Loss of income.

2. Rental costs.

3. Utility bills.

4. Loss of rent.

5. Storage costs.

Explanation:

Liquidated damages can be defined as pre-determined damages or clauses that are highlighted or indicated at the time of entering into a contract between a contractor and a client which is mainly based on evaluation of the actual loss the client may incur should the contractor fail to meet the agreed completion date.

Generally, liquidated damages are meant to be fair rather than being a penalty or punitive to the defaulter. It is usually calculated on a daily basis for the loss.

When entering into a contract with another, liquidated damages are intended to represent anticipated losses to the owner based upon circumstances existing at the time the contract was made.

Listed below are five (5) types of potential losses to the owner that would qualify for determination of such potential losses;

1. Loss of income.

2. Rental costs.

3. Utility bills.

4. Loss of rent.

5. Storage costs.