When are liquidated damages typically paid?

Liquidated damages are typically paid upon completion of the job when the project does not meet the stipulated deadlines outlined in the contract. This concept is essential in construction and contract agreements, as it serves to provide a pre-determined amount of compensation for delays in project completion that could result in financial or operational losses for one of the parties involved.

Liquidated damages are established at the outset of a project, but the actual payment is contingent upon the completion of the work. If the project is completed late, the agreed-upon amount is deducted from the final amounts owed to the contractor or responsible party. This approach helps ensure that both parties recognize the importance of adhering to the project timeframe and motivates timely completion to avoid additional financial penalties.