Contracts in the NEC3 family use the term 'low service damages' (optional clause X.17) and generally include a Low Service Damages Schedule.

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For example, suppose Neal Townsend agrees to lease a store-front to Richard Smith, from which Richard intends to sell jewelry.

If Townsend breaches the contract by refusing to lease the store-front at the appointed time, it will be difficult to determine what profits Smith will have lost because the success of newly created small businesses is highly uncertain.

However, the law gives priority to secured creditors (those with a charge over some of the company's property as security for the debt).

In addition, a number of rules exist to prevent one or more creditors from gaining an unfair advantage.

This, therefore, would be an appropriate circumstance for Smith to insist upon a liquidated damages clause in case Townsend fails to perform.

In the case of construction contracts, courts have occasionally refused to enforce liquidated damages provisions, choosing to follow the doctrine of concurrent delay when both parties have contributed to the overall delay of the project.Liquidations are also classified according to whether the company is solvent or insolvent.If the company is insolvent, this means it is unable to pay its debts as they fall due.After these steps have been carried out, the company is formally dissolved.The law classifies liquidations into two types: voluntary (which is by a shareholders' resolution) or compulsory (by a court order).Consumers argued these charges were well beyond the cost of sending a computerised letter.