Define "liquidated damages" in construction contracts.

Liquidated damages in construction contracts refer to predetermined amounts of money that are established at the outset of a project to compensate the owner in the event that the contractor fails to complete the work on time. This concept is crucial in construction agreements, as it helps provide clarity around the financial implications of delays.

By setting a specific amount for each day or week that the project is delayed, both parties have a clear understanding of the cost of such delays in advance. This can help mitigate disputes later on, as it removes the ambiguity often associated with calculating damages after a delay occurs. The notion is that these damages are designed to cover losses that the owner might suffer due to the contractor’s failure to adhere to the agreed-upon schedule.

Thus, the choice indicating liquidated damages as predetermined amounts for compensating delays in project completion aligns with the foundational legal principle that aims to state the consequences of not meeting contractual deadlines in a clear and agreed-upon manner.