Why are contractually agreed liquidated damages for?
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A. .give the contractor an incentive to meet an aggressive schedule or challenging quality objectives. B. .penalize the contractor for late completion of a project or failure to meet specifications. C. .cover the customer s costs caused by late completion or failure to meet specifications by the contractor. D. .make a bid or proposal binding for the offerer while the customer has time to select among various bidders.
Liquidated damages are the financial amounts that are agreed upon in a contract by both parties. These are payments that are made to the injured party in case of a breach of some aspect of the contract.
For instance, if work is not done on time or done incorrectly, these damages may be paid. Both of the parties will make a list of items that will be considered part of this breach and agreement must be reached before the contract begins. The amount of money paid is not to be higher than the amount owed and are not punitive.