Some commentators believe that liquidated damages are nearly always a good thing for vendors to include in their contracts, on grounds that it fixes the damages risk (and thus can be built into the pricing structure) and helps minimize damage to the parties’ business relationship in case of breach. See the forum discussion on that topic at the IACCM Web site (for a short link, go to http://preview.tinyurl.com/2lm7es).

The amount of liquidated damages can be tailored to the parties’ situation. In services agreements, liquidated damages might be a fixed (or escalating) dollar amount per day (or week, month, etc.) that the deliverables are late. Or it might be a specified (or escalating) percentage of the contract value.