Legal Definitions - liquidated amount

A liquidated amount refers to a sum of money that is fixed, certain, or easily calculated based on the terms of an agreement, a contract, or a pre-established formula. It is not an estimate or an amount that requires further negotiation or a court's decision to determine its value; rather, it can be precisely determined from existing information.

Here are some examples to illustrate this concept:

• Rental Agreement Late Fees: Imagine a residential lease agreement that states, "A late fee of $50 will be assessed for any rent payment received after the 5th day of the month." If a tenant pays their rent on the 7th of the month, the landlord knows precisely that an additional $50 is owed. This $50 is a liquidated amount because it is a fixed, pre-determined sum clearly specified in the lease agreement, requiring no further calculation or discussion to establish its value.

• Freelance Service Invoice: A freelance writer agrees to provide content for a client at a rate of $0.15 per word. After completing an article that is 2,000 words long, the writer sends an invoice. The amount on the invoice ($0.15 x 2,000 words = $300) is a liquidated amount. It is precisely calculated based on the agreed-upon rate and the measurable output (word count), as stipulated in their initial agreement.

• Software License Renewal: A business subscribes to a software service under a contract that specifies an annual renewal fee of $1,000, plus an additional $50 for each user beyond the initial five included in the base fee. If the business has 10 users when it's time to renew, the total renewal cost will be $1,000 (base fee) + (5 additional users * $50/user) = $1,250. This $1,250 is a liquidated amount because it is directly computable by applying the clear terms and rates outlined in the software license agreement.