Liquidated Damages Clause
What it is
A liquidated damages clause sets a pre-agreed penalty for specific breaches — most often missed deadlines or delivery failures. Instead of proving actual damages at trial, the non-breaching party collects the stated amount. The clause only flows in one direction: the contractor pays the client for missing milestones, not the other way around.
Why it matters to you
Liquidated damages can make a single missed deadline worth more than the entire contract. The aggressive versions have no cap, compound over time, and activate on delays caused partly by factors outside your control — including the client's own review delays or late-arriving approvals. A reasonable version ties the penalty to actual harm, includes a cap, and excludes delays caused by the other side.
The aggressive version
This is liquidated damages language that creates significant financial exposure for any delay.
For each calendar day that Contractor fails to deliver any milestone by the agreed deadline, Contractor shall pay to Client liquidated damages in the amount of five hundred dollars ($500) per day. These damages are not a penalty but are a genuine pre-estimate of Client's anticipated losses. Contractor's obligation to pay liquidated damages shall continue until the milestone is delivered and accepted by Client, and shall not be excused by any claims of delay, regardless of cause.
What each part does to you
“$500 per day”
Daily accrual means ten days late equals $5,000 — potentially exceeding the value of the milestone.
“regardless of cause”
Delays caused by Client's late feedback, changed requirements, or unavailable approvers are still your problem.
“until the milestone is delivered and accepted by Client”
Delivery alone does not stop the clock. Client acceptance stops it — and acceptance can be withheld.
The market standard version
A proportionate liquidated damages clause addresses genuine harm without creating disproportionate financial exposure.
If Contractor fails to deliver a milestone within ten (10) business days of the agreed date for reasons within Contractor's control, Contractor shall pay liquidated damages of one hundred dollars ($100) per business day of delay, up to a maximum aggregate of ten percent (10%) of the total contract value. This clause shall not apply where delay is caused by Client's failure to provide timely approvals, feedback, or required materials. These damages constitute Client's sole remedy for late delivery.
Your counter-language
This version creates accountability for genuine delays while excluding circumstances you do not control.
Liquidated damages for delay shall apply only to delays caused solely by Contractor's failure to perform, and shall be calculated at [agreed daily rate] per business day, up to a maximum of [X]% of the milestone fee. Delay caused by: Client's failure to provide timely approvals, feedback, or materials within agreed timescales; scope changes requested by Client; or events outside both parties' reasonable control shall not be counted. Client's acceptance or rejection of delivered work must occur within five (5) business days of delivery notice or the milestone is deemed accepted.
What to ask for
“Can we add a cap on the total liquidated damages, tied to a percentage of the milestone fee rather than an uncapped daily accrual?”
“Can we exclude delays caused by your own review delays, missing approvals, or changed requirements from the calculation?”
“Can we make this symmetric — if your late feedback delays my delivery, does that trigger any remedy for me?”
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ClauseCheck is not a law firm and does not provide legal advice. The clause examples and counter-language on this page are illustrative only and are not a substitute for advice from a qualified attorney. Contract terms vary by context; consult a lawyer before making decisions on any specific agreement.
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