Liquidated Damages vs. Penalty Clauses in Indian Commercial Contracts

I. Introduction Commercial agreements are the life & blood of business in India. Commercial contracts usually detail the consequences of non-performance/breach of contract. They normally contain the liquidated damages clause, or the penalty clause (or both). Notwithstanding the fact that both clauses are a contractual remedy for breach of contract, the Indian legal system recognizes a significant difference between them, and indeed Section 74 of the Indian Contract Act, 1872. It is...