CWR > Volume 8(2); 2022 > Correspondence
Research Article
Published online: September 1, 2022

Liquidated Damages Clause in Commercial Contracts: A Pakistan’s Perspective

Kashif Imran Zadi & Ahmad Abdul Rehman Khan & Usman Hameed & Khushbakht Qaiser & Zarfishan Qaiser
University of Management and Technology
Faculty Office, Library Building, Level-6, University of Management and Technology (UTM). C-II, Johar Town, Lahore, Pakistan.
Corresponding Author:

ⓒ Copyright YIJUN Institute of International Law. This is an Open Access article distributed under the terms of the Creative Commons Attribution Non-Commercial License ( which permits unrestricted non-commercial use, distrJuvenile Offenders in Community Corrections: A Systemic Look at Risk Evaluation Methods to Implement UN Resolutions under the Chinese Legal Systemibution, and reproduction in any medium, provided the original work is properly cited.


Economists believe that if the legal remedy for breach is expectation damages, the idea of efficient breach allows us to forecast when parties will choose to breach a contract. On the other hand, the economic premise of rational wealth-maximizing actors fails to reflect significant nonmonetary values and incentives that impact behavior in predictable ways. People act following shared community norms, such as the moral norm of honoring pledges, when interpersonal duties are informal or underspecified. However, when the parties specify or otherwise formalize punishments for uncooperative behavior, it becomes more strategic and self-interested. The remedy for breach is made apparent with a liquidated-damages clause. This article will highlight the issues about the cure for breach in cases where liquidate damages clause is exploited, focusing on the Common law and precedents by eminent judges, including Pakistan’s legislation.

Keywords : Liquidated Damage, Commerical Contract, Pakistan, Contract Act of 1872

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