The essence of a liquidated damages is the payment of a specific sum of money by way of compensation for damages arising from non-performance or improper performance of a non-monetary obligation.
Therefore, it serves as a lump-sum indemnity and, in contrast to compensation of damages pursued under general principles of civil law; the creditor is entitled to the specific sum of money stipulated in the contract regardless of the actual size and extent of the damage sustained.
The primary action undertaken by CGO Legal law firm when handling liquidated damages cases is examining the prerequisites determining whether or not liquidated damages are eligible to be claimed within the scope of the given contract. For that purpose, the following prerequisites must be met:
- penalty must have been explicitly stipulated in the contract,
- The obligation stipulated by the contract must have been breached in the way, liquidated damages were intended for,
- The breach of the obligation occurred as a consequence of circumstances that the contractor can be held responsible for,
- liquidated damages were not stipulated for a monetary obligation.
Following the analysis of the legal relationship and having found the above prerequisites met, and thereby, liquidated damages are eligible to be claimed, CGO Legal law firm commences and conducts pre-litigation proceedings as well as court proceedings aimed at adjudging the due sum from the negligent contractor. On top of that, it should be noted that it is possible to claim the compensation in excess of contractual penalties (liquidared damages) provided such opportunity had been stipulated in the contract.
CGO Legal law firm is also experienced in representing entities against which liquidated damages were wrongfully or excessively claimed. It is worth noting that under current legal regulations, mitigation of liquidated damages is admissible. Upon request by the creditor, the court may reduce the contractual penalty in case:
- The obligation has been performed to a considerable extent,
- Or if contractual penalty have been grossly overstated.