Liquidated Damages vs Penalty — Section 74 — KSLU Contract 1 Notes

Liquidated Damages vs Penalty — Section 74

Where the contract names a sum payable on breach, English law agonises over whether it is a genuine pre-estimate (liquidated damages, recoverable) or a “penalty” (not). Indian law cut the knot: under Section 74, the court awards reasonable compensation not exceeding the named sum, whatever the contract calls it — the named figure is merely a cap (Fateh Chand v. Balkishan Das; ONGC v. Saw Pipes).