ABSTRACT
A penalty is the sum named in a contract by way of compensation; the amount recoverable is not necessarily the sum actually named, but the value of the precise damage suffered by the injured party not exceeding the sum named. In India, penalty is akin to unliquidated damages. FIDIC Form 1992 Edition, 1999 Edition and 2017 Edition provide for payment of liquidated damages for delay in completion of the project at the rate "sum named in the Appendix or Contract Data" which shall be paid for every day of delay beyond the stipulated completion date up to the relevant date of completion. The delay damages are not to exceed the maximum amount stated in the contract data. The purpose of liquidated damages is to compensate the injured party for the loss suffered. The purpose of liquidated damages, makes it clear that there is no distinction between the two ways of naming a sum as compensation, namely penalty and liquidated damages.
