Liquidated damage is shown in legal contracts as an intangible estimate or a big loss to one of its parties involved. It is like a provision for which you can pay a specific sum. Therefore, before any transactions, the parties should abide by the conditions of the contract. The liquidated damage clause is not something that courts don't enforce. It happens when the monetary amount of the damage in the clause is disproportional to the scope of what has been affected by the breach of contract.
There are reasons to include liquidated damage in a contract. It simplifies contract breaches. When you and your buyer agree with the liquidated damage that defines the damage amount, it would be easy to resolve the dispute in case of a breach, making it less taxing.
If you don’t include the clause in the purchase agreement, you need to prove how the financial loss will bring in money for the monetary damage of the buyer’s breach. Contract breach also helps recover deposited money. However, it varies from one person and state to another. Therefore, one should know the contract details when it involves monetary exchange. So, get the details of the legal contracts to know the estimated loss.
Liquidated damages are like a representation of loss where the actual damage may be hard to ascertain. The damage is fair and can be punitive. The damage can often be a specific contract clause to cover circumstances when one party experiences the loss of an asset that doesn’t have any monetary value. For instance, when a party in a contract is planning to leak price details in a supply chain essential to a business, it can be considered liquidated damage.
Types of damage to know in a legal context
In case of a legal violation that can harm or injure any party, there are types of compensatory damage, and these include:
• Non-economic damage – It is to make up for non-monetary loss such as emotional or bodily harm
• Economic damage – It helps to recover from financial loss
• Punitive damage – It is to give additional punishment to the party who is guilty
Most real estate transactions will follow a structured process to meet the needs of home buyers and sellers. When everything is successful, both parties will be happy to be part of the deal and transaction easily. However, if anything erupts in the transaction between damage and party, there may be instances. In real estate projects, the real estate agents are aware of the procedures and can help clients compensate for the damage in the best way possible.
The liquidated damage clause in real estate is an agreed upon and reasonable clause to be given to the seller when the buyer breaches the contract due to some circumstances. The amount of liquidated damage can vary from one state or contract to another. Therefore, the agent should know the details before handling the liquidated damage, and the parties involved should be aware of it.
