Legal Definitions - liquidated

Liquidated describes an amount of money or a debt that has been definitively established, settled, or agreed upon. It means the exact sum is known, certain, or easily calculable, rather than being an estimate or an amount still subject to dispute or negotiation.

• Example 1: Contractual Damages

  Scenario: A software development company signs a contract with a client. The contract includes a clause stating that if the software delivery is delayed by more than two weeks, the developer will pay the client $1,000 for each additional week of delay.

  Explanation: In this case, the $1,000 per week is a liquidated amount of damages. It's a specific, pre-agreed sum that both parties have settled on in advance to compensate for a particular breach (delay), making the financial consequence certain and not open to later estimation of actual loss.

• Example 2: Settled Debt

  Scenario: After reviewing their monthly statement, a small business owner confirms they owe their supplier exactly $3,500 for goods received last month.

  Explanation: This $3,500 is a liquidated debt because the precise amount owed is clear, confirmed, and not subject to any further calculation or disagreement between the business owner and the supplier.

• Example 3: Insurance Payout

  Scenario: An individual has an insurance policy for a specific antique vase, which states that in the event of its total loss, the policy will pay out a fixed sum of $5,000.

  Explanation: The $5,000 payout for the lost vase is a liquidated amount. The insurance policy pre-determined and fixed the exact compensation for that specific item, making the amount certain and not requiring an appraisal after the loss occurs.