Who is afraid of liquidated damages?

Contractors often bemoan the topic of liquidated damages. The term liquidate damages refers to agreed amounts of money that are payable by a party who does not meet certain types of obligations under a contract. The next time an owner or general contractor insists on a liquidated damages clause in your contract, there are some things to consider. To begin with, determine the purpose of the proposed liquidated damages. Next, make sure the amount of proposed liquidated damages seems reasonable based on the intended purpose. So don't panic the next time an owner or general contractor insists on a liquidated damages clause in your contract. Instead, embrace the idea as an opportunity to manage your risk, and then negotiate the best deal you can.