- Liquidated damages are a predetermined sum that a contractor must pay to the owner if the contractor fails to complete the work by the agreed upon deadline. They are intended to compensate the owner for monetary losses due to the delay. - For liquidated damages to be enforceable, the amount must be a reasonable estimate of the owner's losses in case of a delay, the exact losses must be difficult to determine, and the damages must not act as a penalty. - Courts will generally uphold liquidated damages clauses if the daily amount is a reasonable estimate of losses and if the delay is not due to events outside the contractor's control such as natural disasters.