Delhi High Court has clarified that only where it is impossible to assess the compensation arising from the breach of an agreement, and the parties have agreed to a pre-determined compensation amount, not by way of penalty or unreasonable compensation, can the agreed amount be awarded as a genuine pre-estimate of loss suffered without at least proving a semblance of loss. An aggrieved party cannot claim that liquidated damages must be paid ipso facto.
The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at firstname.lastname@example.org or email@example.com. Readers should not act on the basis of this information without seeking professional legal advice.